Rakesh Jhunjhunwala’s Asks Questions Federal Bank’s Earnings Call

Rakesh Jhunjhunwala Tips & Portfolio

Unimpressed with the numbers, Jhunjhunwala questioned the banks lower pre-provisioning profits and its lack of specialize in third-party retail merchandise.
Portfolio capitalist Rakesh Jhunjhunwala gave a troublesome time to Federal Bank chief Shyam Srinivasan on the earnings call when the banks profits fell sharply for the second quarter in an exceedingly row.

Net profit for the March quarter fell 44 percent year-on-year because of the new RBI guidelines on bad loan recognition requiring banks to make higher provisions.Within the Gregorian calendar month quarter, the banks profits had been hit owing to stress in its education loan book.

Unimpressed with the numbers, throughout the post-results investor/analyst invoke weekday, Jhunjhunwala questioned the banks lower pre-provisioning profits and its lack of specialize in third party retail merchandise that has generated smart revenues for a few of Federal Banks rivals.

The ace capitalist, UN agency is additionally the 54th richest Indian as per Forbes list of billionaires, holds 1.79 % in Federal Bank at the moment. Jhunjhunwala has reduced exposure to the stock within the past few months. He owned 2.18 % within the bank at the tip of June last year.

The stock hit associate incomparable high of Rs 127 in Oct last year, however has since shed around 30% owing to the unsatisfying monetary performance.

Addressing Jhunjhunwalas question, Srinivasan, UN agency is that the chief executive officer and MD of the Bank, conceded that margins (3.11 % from three.42 % a year ago) had compressed attributable to interest reversal on account of recognising some assets as NPAs and progressive prices on account of payment of gratuity and wages.

New business growth

In his characteristic drawl, Jhunjhunwala asked: What about retail products like selling mutual fund products, health insurance, life insurance, credit cards, which is where the banks are making the money, the good ones?

To that Srinivasan replied, Which is why we have recruited new people for the new areas we are venturing into and a full-fledged team will work on that.

Srinivasan additional assuaged capitalist issues by light the banks stressed assets pool falling to its lowest within the last 12 quarters. He aforementioned the bank can intrude on four new revenue accretive businesses, that it didn't step into earlier attributable to prudent measures.

Federal Banks retail unsecured disposal book can create a phased entry into personal loans and connected merchandise beside disposal to industrial vehicles section.

On the corporate front also, we have recruited a person on the treasury side and a senior person to look at the government business. We are investing in the franchise as we have the platform now, he added.

Insurance stake sale uncertain?

Jhunjhunwala additionally expressed chafe on the bidding method of its stake in IDBI Federal insurance and therefore the quantum, that is on sale for the past few months.

It is in the very last stages, between two final bidders the negotiations are going on. In FY19, by July or August the full process will be consummated. We are waiting for the right price to arrive and decide on taking a callThey are bidding for 100 percent, Srinivasan aforementioned.

Still not happy, the large Bull ironed on, voice communication I have no ideaour bank has some or the other problem every quarter. Sometimes there is education loans, now it is RBI circular. Anyways, God bless! he all over his question session.

Srinivasan was fast to feature, We are a real business Rakesh.

This quarters performance are crucial for Federal Bank if it needs to retain Jhunjhunwala on its list of key shareholders.