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Unsecured retail portfolio stress
View Risks →The Federal Bank Limited — Q1 FY25
Federal Bank reported a strong Q1 FY25 with highest-ever quarterly net profit of INR 1,010 crore and operating profit of INR 1,501 crore.
bullish
high
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Federal Bank reported a strong Q1 FY25 with highest-ever quarterly net profit of INR 1,010 crore and operating profit of INR 1,501 crore. Revenue growth was driven by robust credit and deposit growth of ~5% sequentially, with notable reversal in NRE deposit decline. Asset quality remained stable with credit cost at 27 bps, guided to stay around 30-35 bps for FY25. Management expects NIM to sustain near Q1 levels and targets ROA improvement to 1.30-1.35%. Key risks include potential stress in unsecured retail segments and regulatory overhang on co-branded credit cards, with clearance expected by Q2/Q3. Overall, the bank is well-positioned for sustained growth, though margin expansion remains a focus area.
फेडरल बैंक ने पहली तिमाही (अप्रैल-जून 2024) में अब तक का सबसे ज़्यादा मुनाफा कमाया - 1,010 करोड़ रुपये शुद्ध लाभ और 1,501 करोड़ रुपये परिचालन लाभ। कर्ज़ और जमा में करीब 5% की बढ़ोतरी से आय बढ़ी। खास बात यह रही कि एनआरई जमा में गिरावट रुक गई। कर्ज़ की गुणवत्ता स्थिर रही, जिसमें बुरे कर्ज़ पर खर्च सिर्फ 0.27% रहा। बैंक ने पूरे साल यह खर्च 0.30-0.35% के आसपास रखने का लक्ष्य रखा है। प्रबंधन का कहना है कि ब्याज आय (NIM) पहली तिमाही के स्तर पर बनी रहेगी और कुल संपत्ति पर रिटर्न (ROA) 1.30-1.35% तक पहुंचाने की कोशिश है। जोखिम की बात करें तो छोटे कर्ज़ और को-ब्रांडेड क्रेडिट कार्ड पर नियमों का असर पड़ सकता है, लेकिन सितंबर-दिसंबर तक साफ़ होने की उम्मीद है। कुल मिलाकर बैंक मज़बूत स्थिति में है, हालांकि मुनाफ़े के मार्जिन पर ध्यान देना ज़रूरी है।
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Read Transcript →Quarter Snapshot
Net Profit
INR 1,010 crore
Highest ever quarterly
Record quarterly net profit, reflecting strong operational performance.
Operating Profit
INR 1,501 crore
Highest ever quarterly
Record operating profit driven by revenue growth and cost management.
Credit Cost
27 bps
Within guided range
Credit cost at 27 bps, guided to stay around 30-35 bps for FY25.
Branch Additions
~100 branches
Planned for FY25
Targeting ~100 new branches in FY25 to support deposit growth.
What Changed vs Last Quarter
NEW
ROA improvement to 1.30-1.35%
Targeting return on assets to improve from current 1.27% to 1.30-1.35% over the year.
NEW
NIM to sustain near Q1 levels
Net interest margin expected to remain around Q1 levels for the next couple of quarters, with dynamic review thereafter.
UPDATED
Credit cost guidance of 30-35 bps for FY25
Management expects credit cost to remain in the range of 30-35 basis points for the full year, consistent with Q1's 27 bps.
UPDATED
Branch addition of ~100 in FY25
Plans to add approximately 100 branches in FY25, with ~40 in H1 and balance in H2.
DROPPED
ROA expansion of 4-5 bps annually
Management expects ROA to continue expanding by 4-5 basis points each year, driven by income growth and cost control.
DROPPED
Fee income growth of 20-25% in FY25
Core fee income is expected to grow 20-25% year-on-year in FY25, driven by card fees, loan processing fees, and other products.
NEW RISK
Unsecured retail portfolio stress
Potential increase in slippages from credit cards and personal loans, though management believes it remains manageable.
NEW RISK
Cost-income ratio remains elevated
C/I ratio at ~53% due to investments in technology and branches; target of 50% may take longer.
RISK GONE
Elevated cost of deposits
Cost of funds continues to rise due to competitive deposit market and structural shift in NRI flows, pressuring NIMs.
RISK GONE
Modest yield expansion relative to peers
Loan yields have increased only ~150 bps since rate hikes began, lagging peers, partly due to conservative risk appetite.
RISK GONE
Succession risk at top management
MD & CEO Shyam Srinivasan's term ends in five months; board is searching for a successor, creating leadership uncertainty.
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Guidance and risk preview
Management expects credit cost to remain in the range of 30-35 basis points for the full year, consistent with Q1's 27 bps.
Potential increase in slippages from credit cards and personal loans, though management believes it remains manageable.
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