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View Promises →The Federal Bank Limited — Q4 FY25
Federal Bank reported Q4 FY25 net profit of INR 1,030 crore, up 14% YoY, crossing a milestone of INR 5,18,000 crore in total business.
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Federal Bank reported Q4 FY25 net profit of INR 1,030 crore, up 14% YoY, crossing a milestone of INR 5,18,000 crore in total business. NIM improved 1 bps to 3.12% despite a repo rate cut, aided by mix shift to mid-yielding segments (19% YoY growth) and strong CASA growth (6.74% QoQ). Asset quality improved with GNPA down 11 bps to 1.84%. Management guided for loan growth to improve from 12% and cost-to-income ratio to remain around 53%. Key risks include NIM compression from further rate cuts and elevated slippages in the MFI portfolio.
फेडरल बैंक ने चौथी तिमाही में 1,030 करोड़ रुपये का शुद्ध लाभ कमाया, जो पिछले साल से 14% ज्यादा है। बैंक का कुल कारोबार 5,18,000 करोड़ रुपये के पार पहुंच गया। ब्याज दरों में कटौती के बावजूद बैंक की कमाई दर (NIM) 3.12% पर स्थिर रही, क्योंकि उसने ज्यादा ब्याज देने वाले कर्जों पर ध्यान दिया और बचत खातों (CASA) में 6.74% की बढ़ोतरी हुई। खराब कर्ज (GNPA) घटकर 1.84% हो गया। बैंक का कहना है कि आने वाले समय में कर्ज वृद्धि 12% से बढ़ेगी और खर्च अनुपात 53% के आसपास रहेगा। लेकिन अगर ब्याज दरें और गिरीं तो मुनाफा कम हो सकता है, और छोटे कर्जों (MFI) में बकाया बढ़ने का खतरा है।
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NIM compression from rate cuts
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CASA growth QoQ
6.74%
+6.74% QoQ
CASA deposits grew 6.74% quarter-on-quarter, driven by strong current account growth of 27% QoQ.
Current account growth YoY
35%
+35% YoY
Current account deposits grew 35% year-on-year, reflecting successful liability franchise building.
Mid-yielding segment loan growth YoY
19%
+19% YoY
Loans in the mid-yielding segment (e.g., CV, gold, MSME) grew 19% YoY, aligning with strategic focus.
GNPA ratio
1.84%
-11 bps QoQ
Gross NPA ratio improved 11 bps sequentially to 1.84%, a decadal best for the bank.
What Changed vs Last Quarter
NEW
Cost-to-income ratio around 53%
CFO guided cost-to-income ratio to remain in the 52.5%-53.5% range over the next few quarters.
NEW
CASA ratio target of 36% over 3 years
MD reiterated the strategic target to reach 36% CASA ratio over three years, from current ~30%.
UPDATED
Loan growth to improve from 12%
Management expects overall loan growth to be better than the 12% reported for FY25, driven by mid-yielding segments and revival in gold loans.
UPDATED
Credit cost guidance of 35-40 bps
CFO reiterated credit cost guidance of 35-40 bps for FY25, which was achieved at 38 bps.
DROPPED
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.
DROPPED
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.
NEW RISK
Stickiness of year-end CASA
Analyst raised concern that year-end CASA growth may not be sticky; MD acknowledged some year-end effect but cited fundamental improvement in acquisition.
NEW RISK
OpEx pressure from branch expansion
Q4 OpEx was elevated due to branch openings; while management expects normalization, continued investment may keep cost-income ratio elevated.
RISK GONE
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.
RISK GONE
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.
🤫 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 Q2 FY25, Q3 FY24
Management reiterated loan growth guidance of around 18% for FY25, with focus on deposit mobilization rather than slowing advances.
Mentioned in Q1 FY25, Q4 FY24
RBI embargo on co-branded cards continues; clearance expected by Q2/Q3 but uncertainty remains.
Mentioned in Q1 FY25, Q2 FY25
MFI slippages have increased, though management claims they are below industry levels due to conservative underwriting and geographic concentration in southern states.
Fast read
Guidance and risk preview
Management expects overall loan growth to be better than the 12% reported for FY25, driven by mid-yielding segments and revival in gold loans.
Further repo rate cuts could compress NIMs despite management's agile measures; MD acknowledged challenge in maintaining current NIM.
View Risks →