Federal Bank's Q1FY16 results were sharply below estimates as the earnings declined by 35.8% YoY (49.6% QoQ) to Rs 1.4 bn led by sharp jump in provision expenses. NII was in line with estimates as it grew by 7.2% YoY (3% QoQ decline) to Rs 6.0 bn. Advances growth was weak at 10.1% YoY (-3.4% QoQ) led by QoQ decline in corporate, agri and retail advances. NIMs also dipped by 19 bps QoQ to 3.12%. Asset quality nose-dived as GNPA and NNPA increased to 2.59% and 0.98% from 2.04% and 0.73% in Q4FY15.