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View Promises →The Federal Bank Limited — Q2 FY25
Federal Bank reported a record net profit of INR 1,057 crore (+10.79% YoY) and NII of INR 2,367 crore (+15.11% YoY) in Q2 FY25.
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Federal Bank reported a record net profit of INR 1,057 crore (+10.79% YoY) and NII of INR 2,367 crore (+15.11% YoY) in Q2 FY25. Asset quality improved with GNPA at 2.09% and net NPA at 0.57%. Deposit growth lagged loan growth (1% QoQ vs 19.45% YoY advances), leading to a CD ratio above 85%. Management emphasized CASA growth and tactical term deposit pricing to close the gap. New MD KVS Manian is conducting a strategy review, with details expected in December. NIM was impacted by 7bps due to penal charge reclassification; underlying NIM improved to 3.19%. Risks include elevated competition for deposits, potential MFI stress, and margin pressure from rate cuts.
फेडरल बैंक ने दूसरी तिमाही में 1,057 करोड़ रुपये का रिकॉर्ड मुनाफा कमाया, जो पिछले साल से 10.79% ज्यादा है। ब्याज से होने वाली आय (NII) 2,367 करोड़ रुपये रही, जो 15.11% बढ़ी। बैंक के खराब कर्ज (GNPA) में सुधार हुआ, अब यह 2.09% और शुद्ध खराब कर्ज (Net NPA) 0.57% है। जमा बढ़ोतरी कर्ज बढ़ोतरी से पीछे रही, जिससे कर्ज-जमा अनुपात (CD ratio) 85% से ऊपर चला गया। प्रबंधन जमा बढ़ाने पर जोर दे रहा है। नए MD केवीएस मणियन दिसंबर में रणनीति की समीक्षा करेंगे। ब्याज मार्जिन (NIM) पर दबाव है, लेकिन असली मार्जिन 3.19% तक सुधरा। आगे जमा के लिए कड़ी प्रतिस्पर्धा, माइक्रोफाइनेंस में तनाव और ब्याज दर कटौती से मार्जिन पर असर पड़ सकता है।
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Deposit growth lagging loan growth
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Read Transcript →Quarter Snapshot
CASA growth QoQ
4%
+80bps QoQ
CASA ratio increased 80bps sequentially, driven by focus on primary banking relationships.
GNPA ratio
2.09%
-16bps YoY
Gross NPA improved to 2.09%, with PCR at a 16-quarter high.
Net NPA ratio
0.57%
-5bps YoY
Net NPA remained low at 0.57%, reflecting strong asset quality.
LCR
115%
+3pp QoQ
Average LCR improved to 115% from 112% in Q1, aided by deposit mobilization.
What Changed vs Last Quarter
NEW
Loan growth guidance maintained at ~18%
Management reiterated loan growth guidance of around 18% for FY25, with focus on deposit mobilization rather than slowing advances.
NEW
ROA expected around 1.8% for FY25
ROA guided at ~1.8% for the full year, with potential slight improvement if rate cuts occur later.
NEW
Infrastructure bond issuance of INR 1,500 crore
Bank plans to raise INR 1,500 crore via infrastructure bonds to fund infrastructure assets, a first for the bank.
UPDATED
Credit cost guidance unchanged at 29-30bps
Full-year credit cost guidance remains at 29-30 basis points, supported by strong asset quality and conservative underwriting.
DROPPED
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.
DROPPED
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.
DROPPED
Branch addition of ~100 in FY25
Plans to add approximately 100 branches in FY25, with ~40 in H1 and balance in H2.
NEW RISK
Deposit growth lagging loan growth
Deposit growth was only 1% QoQ vs loan growth of 19.45% YoY, leading to a CD ratio above 85%. Management aims to close the gap but faces competitive pressure.
NEW RISK
NIM pressure from penal charge reclassification and rate cuts
NIM was impacted by 7bps due to penal charge reclassification. Potential rate cuts could further pressure margins, though management expects underlying NIM improvement.
NEW RISK
Credit card embargo resolution timeline uncertain
RBI embargo on co-brand credit card reissuance remains unresolved. Management expects to approach RBI soon for one model, but other models may take longer.
RISK GONE
Regulatory overhang on co-branded credit cards
RBI embargo on co-branded cards continues; clearance expected by Q2/Q3 but uncertainty remains.
RISK GONE
Cost-income ratio remains elevated
C/I ratio at ~53% due to investments in technology and branches; target of 50% may take longer.
🤫 Topics management stopped discussing
Mentioned in Q1 FY25, Q4 FY24
Plans to add approximately 100 branches in FY25, with ~40 in H1 and balance in H2.
Mentioned in Q1 FY25, Q4 FY24
C/I ratio at ~53% due to investments in technology and branches; target of 50% may take longer.
Mentioned in Q1 FY25, Q4 FY24
Management expects credit cost to remain in the range of 30-35 basis points for the full year, consistent with Q1's 27 bps.
Mentioned in Q1 FY25, Q4 FY24
RBI embargo on co-branded cards continues; clearance expected by Q2/Q3 but uncertainty remains.
Fast read
Guidance and risk preview
Management reiterated loan growth guidance of around 18% for FY25, with focus on deposit mobilization rather than slowing advances.
Deposit growth was only 1% QoQ vs loan growth of 19.45% YoY, leading to a CD ratio above 85%.
View Risks →