Federal Bank conducted a conference call on 02 May 2024 to discuss its financial results for the quarter ended March 2024. Shyam Srinivasan, MD&CEO of the bank addressed the call:

Highlights:

The bank has achieved record high net profit in FY2024. 

The branch network of the bank has reached 1500 branches, recording 10% growth in FY24.

The bottom line of the bank was impacted due to the impact of one off provision of Rs 162 crore from pension benefit to the employees.

The bank has exhibited sequential improvement in the margins and asset quality continues to remain strong. 

The cost of deposits remains elevated while the bank expects margins to improve in FY2025. 

The fresh slippages in Q4 were lower than recoveries and upgrades.

The bank has guided at 4 to 5 bps improvement in the RoA every year and excluding the one of the bank has exhibited an increase in RoA for the seventh straight year. 

The bank is confident of continuing ROA improvement in FY2025 and beyond. 

The bank is confident of growing fee income at 20 to 25% in FY2025. 

With regard to restrictions on co-branded credit cards, corrective actions are underway and the bank is going to submit its plan with the RBI soon. 

The bank has searched for candidates for the post of MD and it''s going to send the names to the RBI in 7 to 15 days. So there will be clarity in the next 3 months. 

About 45% of the branches added in FY2023 have achieved break even. 

The bank targets 5 to 7% increase in network every year. The bank aims to add 100 branches in FY 2025

Bank is maintaining more than 15% provision coverage on restructured loan book. 

The bank has witnessed a low 23 bps credit cost in FY2024. It expects the normal credit cost at around 30 bps for FY 2025.

The bank expects the cost of deposits to move up for the next couple of quarters. 

The bank is targeting 2 to 3 bps improvement in the margins. 

No impact from new guidelines on investment on capital. 

The expense ratio is expected to be 50% for FY2025 and improve ahead. 

The MCLR linked loan book amounts to 51% and fixed rate 27%.

The IT spends stood at 6.7% of the overall expenses and the bank aims to raise it to 8%.

Excluding one off, the bank is expecting 5% growth in employee expenses for FY2025.