Shares of Federal Bank fell 7.8% to Rs 128.5 per share in intraday trading on Friday after the bank posted weaker-than-expected operating results for the March quarter (Q4FY23).

The private lender reported net interest income (NII), the difference between interest received and interest paid, at Rs 1,909.29 crore in Q4FY23, compared with a Bloomberg consensus estimate of Rs 2,577 crore. The reported NII was 25% higher than last year’s Rs 1,525 crore. For the full FY23, NII recorded revenue of Rs 7,232.16 crore, up 21% YoY.

Also, annual net interest income increased from Rs 5,961.96 crore to Rs 7,232.16 crore, a year-on-year increase of 21.31%. Net interest margin (NIM) contracted to 3.31%, from 3.49% QoQ. Last year, NIM was 3.16%.

Meanwhile, operating profit in Q4FY23 rose 67% YoY to Rs 1,334.58 crore compared to Rs 7,982 crore in Q4FY22. Also, the company reported a record net profit of Rs 902.6 crore for the quarter, up 67% from Rs 540.5 crore last year.

“We delivered industry-leading results with a net profit of Rs 903 crore and a record return on equity of 17.48%. Consistent performance throughout the year resulted in an annualised net profit of Rs 3,010.59 crore while maintaining sound assets across all segments of quality. Notably, our market share gains across product categories have been strong,” said Federal Bank MD and CEO Shyam Srinivasan.

Bloomberg estimated a net profit of Rs 797 crore.

The bank said its total business would reach Rs 3.87 trillion by March 31, 2023, from Rs 3.26 trillion last year, a growth rate of 18.74%. Total advances soared from Rs 1.47 trillion to Rs 1.77 trillion by the end of Q4FY23, a year-on-year increase of 20.14%.

Its agricultural advances increased by 21.46%, corporate loans increased by 23.45%, commercial banking increased by 17.91%, and retail advances increased by 17.16%.

Deposits grew 17.44% to Rs 2.13 trillion from Rs 1.81 trillion year-on-year. CASA deposits stood at Rs 69,740.98 crore by the end of March 2023.

Regarding asset quality, the gross non-performing asset (GNPA) ratio rose sequentially from 2.43% to 2.36%, while the NNPA ratio increased from 0.73% to 0.69%.

However, its slippage increased from Rs 412 crore to Rs 454 crore sequentially. Provisions for Q4FY23 were at Rs 116.6 crore vs QoQ at Rs 198.7 crore/Rs 75.2 crore YoY.

Federal Bank shares were down 6.8% at Rs 130 per share at 1:37 pm, while the benchmark S&P BSE Sensex was down 0.7%.