Federal Bank posted a net profit of ₹906 crore in Q4 FY24, up 0.4 per cent on year due to higher operating expenses. Sequentially, the profit after tax was 10 per cent lower on the back of 13 per cent decline in other income.

At an earnings call, MD and CEO Shyam Srinivasan said expenses were higher due to a one-time wage impact of around ₹200-crore for pension arrears. Operating expenses for the quarter were ₹1,839 crore, up 41 per cent on year and 19 per cent on quarter.

Net advances increased 20.0 per cent y-o-y and 5 per cent q-o-q to ₹2.1 lakh crore as of March 31 led by 20.1 per cent growth in retail advances to ₹67,435 crore. Business banking advances grew 21.1 per cent on year, commercial banking loans by 26.6 per cent, corporate advances by 12.0 per cent and CV/CE loans by 57.5 per cent.

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Growth momentum is expected to continue to be strong in FY25, Srinivasan said, pegging loan growth for the current financial year at 18 per cent. Gains for the bank in terms of lending market share will be “pronounced”, he added.

Net interest income (NII) rose 15 per cent yoy and 3 per cent qoq to a record of ₹2,195 crore. Net interest margin (NIM) for the quarter was 3.21 per cent compared with 3.19 per cent a quarter ago and 3.36 per cent a year ago.

Credit cost

Srinivasan said with credit cost at 1 bps for the quarter, the bank is comfortable with the level of risk adjusted margin which is expected to remain in the range of 3.00-3.25 per cent.

Risk adjusted NIM for Q4 was 3.20 per cent, higher than 2.96 per cent in the previous quarter but slightly lower than 3.22 per cent in the year ago period.

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Federal Bank’s deposits increased 18 per cent y-o-y and 5 per cent q-o-q to ₹2.5 lakh crore as on March 2024. CASA ratio fell 330 bps on year and 125 bps on quarter to 29.38 per cent at the end of March. Srinivasan said deposit growth of 16-18 per cent “should be possible” in FY25 to match the estimated growth in advances.

Gross NPA ratio of the bank improved to 2.13 per cent as of March 31 from 2.29 per cent in the previous quarter and 2.36 per cent in the previous year. The Net NPA ratio at 0.60 per cent too was better than 0.64 per cent a quarter ago and 0.69 per cent a year ago.

Capital Adequacy Ratio (CRAR) of the bank, as per Basel III guidelines, stood at 16.13 per cent, up from 15.02 per cent as of December 2023.

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