MFI credit cost normalization
MFI credit costs remain elevated at ~10-11%, and management is cautious on growth until asset quality stabilizes further.
FEDERALBNK / Q3-FY26 / risks
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Material risks this quarter
medium
NIM pressure from rate cuts
The full impact of the December repo rate cut will play out in Q4, potentially compressing NIM if not fully mitigated.
LCR regulation impact on growth
New RBI LCR norms from April are expected to reduce LCR by ~5-6%, which could constrain balance sheet growth.
Competitive pressure on home loan yields
Management noted unattractive risk-reward in home loans due to aggressive pricing, limiting growth in this segment.