Federal Bank Q4 FY 23 concall highlights –
Credit growth at 20 pc yoy (led by retail, agri, corporate, commercial and CV book. Business bank grew slower at 13 pc)
Deposit growth at 17 pc yoy
Core fee income up 20 pc yoy (encouraging)
Cost/Income at 49.5 pc vs 59.8 pc yoy !!
GNPAs at 2.36 vs 2.80
NNPAs at 0.69 vs 0.96
PCR at 70 vs 65.5 pc
RoA at 1.45 vs 1.03
RoE at 17.5 vs 11.9
NIMs at 3.31 vs 3.16 yoy (but down qoq)
NII-1909 vs 1525 cr
NP-903 vs 541 cr
Restructured assets at 2830 vs 3536 cr
Q4 slippages at 436 cr (@ 1.04 pc annualised)
CASA ratio at 32 pc ( needs improvement )
Remittance Mkt share at 17 pc vs 21 pc yoy ( still very good )
Loan book – retail:wholesale – 54:46
Retail loans ( w/o Agri,CV, Business bank)-
Housing- 26k cr
LAP- 9.9k cr
Gold- 4.3k cr
Auto- 5.4k cr
Personal- 2.3k cr
Others- 8k cr
Wholesale banking book-
Commercial bank – 17.2k cr
Corporate bank – 64.3k cr
Credit substitutes – 4k cr
Two segments that saw massive growth on a very low base – Micro Finance (up 223 pc), Credit cards( up 493 pc)
Total branches – 1355 vs 1282
NIMs may have bottomed (at 3.31 vs 3.5 qoq). Have already passed on higher deposit rates
Aim to open 100 branches this FY
Cost/Income – intend to bring it down to 48 pc by exit of FY 24
May go in for capital raise for growth in FY 24
Retail deposits at 85 pc vs 92 pc last FY
A large part of NRI deposits are>2cr which are beyond the definition of retail deposits
Seeing trend of ppl moving money into term deposits from saving deposits. That’s an industry wide trend
Bank’s annual slippages were around 1600 cr ie about 1 pc of the book – among the best
Aim to increase gold loan portfolio by 25 pc in FY 24. Current gold loans ( retail + Agri + Business ) @ 10 pc of bank’s book. Aim to cap it below 15 pc of total book
Large part of fixed deposits book has a tenure of 12 months
Guiding for 3.30-3.35 NIMs for FY 24
High yielding business like micro fin,credit cards,CVs growing much faster but the base is small
Restructured book at 1.6 pc (although falling). This is < 1 pc for most good pvt sector banks. Bank believes that this book is behaving well now (post covid), not a cause of worry
Bank believes most of increases in cost of deposits is already in the price
Lower yields on Advances and hence lower NIMs are also a function of Bank’s conservative lending practises
Since the bank is likely to raise capital this yr, dividend announced at Rs 1 vs 1.8 / share LY
Plus the stock price performed well this year. So the shareholders should be happy … was the management’s call
CRAR at 14.81 pc. Tier-1 at 13.02 pc, Tier-II at 1.79 pc
95 pc of MFI clients are women !!!.. very smart, IMHO
Disc: holding, added more yesterday
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