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View Promises →The Federal Bank Limited — Q4 FY24
Federal Bank reported a strong Q4 FY24 with net profit of INR 906 crore, though this included a one-off pension impact of ~INR 160 crore.
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Federal Bank reported a strong Q4 FY24 with net profit of INR 906 crore, though this included a one-off pension impact of ~INR 160 crore. Excluding that, operational performance was robust, driven by consistent credit growth, pristine asset quality (slippages lower than recoveries/upgrades), and margin expansion. Management guided for continued ROA improvement of 4-5 bps annually, credit cost around 30 bps in FY25, and fee income growth of 20-25%. Key risks include elevated cost of deposits and regulatory restrictions on co-branded credit cards, which are being addressed. Overall, the bank enters FY25 with confidence, focusing on high-yield business mix and branch expansion.
फेडरल बैंक ने चौथी तिमाही में 906 करोड़ रुपये का शुद्ध लाभ कमाया। इसमें पेंशन का 160 करोड़ रुपये का एकमुश्त खर्च शामिल है। इसे हटा दें तो बैंक का प्रदर्शन मजबूत रहा। इसकी वजह है लगातार बढ़ता कर्ज, बेहतरीन कर्ज गुणवत्ता (जहां खराब कर्ज कम हुआ) और ब्याज मार्जिन में बढ़ोतरी। बैंक का कहना है कि आने वाले साल में उसकी कमाई पर रिटर्न (ROA) हर साल 4-5 आधार अंक बढ़ेगा। कर्ज पर होने वाला नुकसान (क्रेडिट कॉस्ट) करीब 0.30% रहेगा और फीस से होने वाली कमाई 20-25% बढ़ेगी। चुनौतियों में जमा पर ब्याज दर का बढ़ना और को-ब्रांडेड क्रेडिट कार्ड पर नियम शामिल हैं, जिन पर बैंक काम कर रहा है। कुल मिलाकर, बैंक नए साल में आत्मविश्वास के साथ उच्च ब्याज वाले कर्ज और नई शाखाओं पर ध्यान दे रहा है।
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Regulatory restriction on co-branded credit cards
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Read Transcript →Quarter Snapshot
Net Profit (Reported)
INR 906 crore
+? YoY
Reported net profit for Q4 FY24, includes one-off pension impact of ~INR 160 crore.
ROA (Full Year)
1.32%
+4 bps YoY
Return on assets expanded from 1.28% in FY23 to 1.32% in FY24, consistent with guidance.
Credit Cost (Full Year)
23 bps
flat YoY
Annualized credit cost for FY24 was 23 bps, reflecting strong asset quality.
Branch Network
1,500+
+10% YoY
Crossed 1,500 branches, a ~10% increase, with faster payback (~18 months).
What Changed vs Last Quarter
NEW
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.
NEW
Credit cost around 30 bps in FY25
Guidance for credit cost to normalize to around 30 basis points in FY25, up from 23 bps in FY24.
NEW
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
Branch expansion of ~100 in FY25
Plans to add at least 100 new branches in FY25, continuing the network expansion strategy.
DROPPED
ROA target of 1.4% by end of 2024
Management confirmed they are on track to achieve 1.4% ROA by end of 2024, with an aspirational target of 1.5% over the next 18 months.
DROPPED
Credit-deposit ratio to moderate to ~80% by calendar 2024
The bank plans to bring its CD ratio down from ~83% to ~80% by calendar 2024 through balanced growth in deposits and loans.
DROPPED
Loan growth guidance of 18% maintained
Despite deposit cost pressures, the bank expects to sustain loan growth of around 18%, with possible mix adjustments.
NEW RISK
Regulatory restriction on co-branded credit cards
RBI paused the co-branded credit card partnership; corrective actions are underway but timeline for resumption is uncertain.
NEW RISK
Elevated cost of deposits
Cost of funds continues to rise due to competitive deposit market and structural shift in NRI flows, pressuring NIMs.
NEW RISK
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.
NEW RISK
Succession risk at top management
MD & CEO Shyam Srinivasan's term ends in five months; board is searching for a successor, creating leadership uncertainty.
RISK GONE
Deposit cost pressure and margin compression
Rising cost of deposits and tight liquidity could compress NIMs, though management aims to protect ROA through other income and efficiency.
RISK GONE
Regulatory impact from AIF provisioning
The bank has exposure to AIF and awaits regulatory clarity; potential provisioning could impact earnings in Q4.
RISK GONE
Structural shift in NR deposit behavior
Post-COVID, NR customers are allocating more to investments abroad, reducing deposit inflows; the bank is adapting but faces headwinds.
RISK GONE
Wage revision and pension costs
Employee expenses rose due to wage revision catch-up (~INR 50+ crore); future pension provisions remain uncertain and could add costs.
Fast read
Guidance and risk preview
Management expects ROA to continue expanding by 4-5 basis points each year, driven by income growth and cost control.
RBI paused the co-branded credit card partnership; corrective actions are underway but timeline for resumption is uncertain.
View Risks →