FEDERAL BANK –
Q1 results and concall highlights –
Deposits @ 2.66 lakh cr, up 20 pc
Advances @ 2.20 lakh cr, up 20 pc
NII up 19 pc @ 2592 cr
Fee income grew 22 pc @ 652 cr
Other income grew 25 pc @ 915 cr
NIMs @ 3.16 vs 3.20 pc
Gross NPAs @ 2.11 vs 2.38 pc
Net NPAs @ 0.60 vs 0.69 pc
High yielding segments grew at faster rates ( However, these segments grew on a lower base ) –
CV/CE loans up 51 pc @ 3.7k cr
MFI loans up 107 pc @ 3.7k cr
MSME book up 22 pc @ 40.1 k cr
Credit cards book up 73 pc @ 3.2k cr
Gold loans book up 31 pc @ 27.4k cr
Total high yielding book @ 35 pc of total loan book. Growth in high yielding segments is critical for the bank as their NIMs are on the lower side
CASA deposits grew by 10 pc @ 77k cr vs 70k cr YoY. CASA ratio @ 29 vs 33 pc YoY
CASA + Deposits < 3 cr form 80 pc of the Deposit book vs 84 pc YoY
Retail : Wholesale loan book @ 56:44
Yield on advances @ 9.43 vs 9.21 pc
Fresh slippages @ 417 cr – very well controlled – this to me is the key highlight of the results
Expecting the credit quality to remain within control for rest of FY 25 ( at similar levels as in Q1 )
Cost / Income @ 53 pc. Added 210 branches in last 18 months. Despite that, cost / income is trending downwards ( vs Q4 ). Aim to bring to down to 50 pc within 1.5-2 yrs time
Aim to add > 100 branches in FY 25. This should also help in deposit mobilisation
Federal bank’s loans are generally priced lower than other banks in most of the segments they operate. As a result, they are able to get best customers, lower slippages ( its reflected in the numbers as well ). But it comes at the cost of lower NIMs. But this is a deliberate ( and very conservative ) policy
Expect the NIMs to be around Q1 levels for Q2,Q3
Expect to exit FY 25 with RoA @ 1.35 pc vs 1.27 pc in Q1. That should mean – continued momentum in Deposits, Advances and control over slippages
Disc: holding from lower levels, things looks well within control, doesn’t look expensive at CMP, not SEBI registered, biased, not a buy / sell recommendation
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