Federal Bank expects loan growth of 18-20% this fiscal

Federal Bank is confident of being ahead of the curve in handling non-performing assets (NPAs) and achieving credit growth in the coming quarters.

The Kerala-headquartered bank’s asset quality improved in the fourth quarter of last fiscal (FY17) with slippages at ₹244 crore — the lowest in the last seven quarters.

“We have reported a very good financial year and would certainly want to keep the momentum. The average slippages for 2016-17 was about ₹260 crore. Barring one or two accounts, we see that run rate continuing,” Shyam Srinivasan, Managing Director and Chief Executive Officer, Federal Bank, said.

He attributed the improvements in asset quality in the last two years to avoiding some large-ticket loans in power and steel that were facing stress. “We have also invested in segregation of sourcing and underwriting in the past many years,” he added.

The bank is projecting a loan growth of 18-20 per cent for the current fiscal and expects equal growth opportunities across retail, small and medium enterprises (SME) and corporate segments.

Srinivasan said its loan book would remain well-diversified with each segment holding about a third share.

While the bank is maintaining dominance in the Kerala market, it is gaining strength outside the State too, where its market share in advances increased by 16 basis points to 0.94 per cent.

The bank plans to raise around ₹2,500 crore of capital this year, while it will also seek shareholders’ approval for increasing the borrowing limit to ₹7,000 crore from ₹3,000 crore.

Srinivasan said its branch at the Gujarat International Finance Tec-city (GIFT) was growing well and had done business of $250 million in 2016-17. “Hopefully, this year the book size will double,” he added.

COMMENT NOW