In This Article:
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Total Business: INR4,99,419 crores.
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Net Profit: INR1,057 crores, 10.79% Y-o-Y growth.
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Operating Profit: INR1,565.36 crores.
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ROE: 13.5%.
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Asset Quality: GNPAs at 2.09%, Net NPAs at 0.5%.
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Net Interest Income (NII): INR2,367.23 crore, 15.1% Y-o-Y growth.
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Total Deposits Growth: 15.6% Y-o-Y.
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Total Net Advances Growth: 19.4% Y-o-Y.
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CASA Ratio: Increased by 80 basis points Q-o-Q.
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NR Savings Growth: 6.8% in the first half of FY '25.
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FCNR Deposits Growth: 14% Y-o-Y.
Release Date: October 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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The Federal Bank Ltd (BOM:500469) achieved its highest-ever net profit of INR 1,057 crores, reflecting a year-over-year growth of 10.79%.
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The bank's asset quality improved with Gross Non-Performing Assets (GNPAs) reduced to 2.09% and Net NPAs to 0.5%.
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Net Interest Income (NII) reached its highest level at INR 2,367.23 crore, marking a year-over-year growth of 15.1%.
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The bank's CASA ratio increased by 80 basis points quarter-over-quarter, positioning it among the industry's leaders in CASA growth rate.
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The Federal Bank Ltd (BOM:500469) reported a significant turnaround in NR savings with a 6.8% growth during the first half of FY '25, reversing last year's decline.
Negative Points
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Deposit growth in the quarter was only 1%, raising concerns about how the bank plans to accelerate it in the coming quarters amid high competition.
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There was a divergence between loan growth and deposit growth, with the latter lagging, which could pressure the bank to slow down loan growth or increase deposit mobilization.
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The bank's unsecured loan mix remains low, which could limit potential yield improvements.
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The bank is facing challenges in maintaining its Net Interest Margin (NIM) compared to other large private banks.
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There is a slight uptick in slippage rates for credit cards and personal loans, although it remains a small percentage of the overall portfolio.
Q & A Highlights
Q: How does Federal Bank plan to accelerate deposit growth in the upcoming quarters given the competitive environment? A: Shalini Warrier, Executive Director, explained that the bank is focusing on maintaining CASA growth by ensuring primary bank status with customers and driving greater CASA growth through both wholesale and retail banking. The bank is also calibrating term deposit costs to avoid unsustainable high rates, focusing on competitive tenors, and leveraging distribution capabilities to attract new funds.