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Analyst Meet / AGM
29-Oct-24
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Conference Call
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Federal Bank
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Maintains loan growth guidance at 18% and credit cost at 30 bps
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Federal Bank conducted a conference call on 28 October 2024 to discuss its financial results for the quarter ended September 2024. KVS Manian, MD&CEO of the bank addressed the call:
Highlights:
The bank has improved a business level to Rs 4.99 lakh crore, recording growth of 17% yoy, out of which last Rs 1 crore of business has been generated in the last four quarters.
The bank has recorded the highest ever net profit, operating profit and the net interest income in the quarter ended September 2024.
The deposits increased 15.56% driven by CASA deposits growth. Advances moved up 19.45% end September 2024.
RoE has improved to 1.28% and ROE to 13.65% in Q2FY2025.
The bank has further improved the asset quality with the reduction in the GNPA ratio to 2.09% and net NPA ratio to 0.57% end September 2024.
The bank has further improved provision coverage ratio to 71.92% in Q2FY2025.
The bank has renewed focus on Casa and term deposits mobilization. The bank has also exhibited an improvement of 18 bps in Casa deposit ratio in Q2.
The penal interest charges reclassification had an impact of 7 bps on margins in Q2FY2025. Excluding this impact, the NIM has improved in Q2FY2025.
The bank has raised the liquidity coverage ratio to 115% end September 2024 from 112% end June 2024.
On the advances growth front, the bank is focusing on the quality growth which would not have bearing on the asset quality.
The slipped ratio is less at 0.7% and the credit cost is also under control at 0.30%. The bank continues to maintain the guidance for credit cost for FY2025.
The slippages in the microfinance sector for the bank have been under control and the two-third of the portfolio is concentrated in the southern region.
The bank is very conservative in the microfinance segment with approval rate at 33% against the industry approval rate of 45%. The bank has also tightened underwriting norms restricting the exposure to customers with single loans avoiding over indebted customers. The bank also does not provide top up loans or lend to NPA customers.
The share of unsecured retail loan books stands at 4.6% end September 2024.
The bank expects the microfinance to stabilize in the next two quarters.
With regards credit card Embargo, the bank is working closely with RBI to resolve the issues and regulatory concerns.
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