Federal Bank: Quarterly Result update
09-05-2022

Federal Bank | Market Cap 19,084 Cr

CMP 91 | P/B 0.95x FY23

Results: Federal Bank reported 7% growth in Net interest income and Loan book growth of 9.5% year on year. Fee Income grew 25% during the same period. Operating profit before provisioning declined 8% year on year.

For full year FY22, operating profit before provisioning declined 3%.

Click here to see the 10 year X-ray of Federal Bank

Key Highlights

Retail loans for the year grew at 6%, Agri loans grew 20% and Business banking grew 15%. Non-retail loan growth majorly came from Institutional Banking (7%) and Corporate banking (12%).
NIM deteriorated to 3.16% (vs 3.23% in Q4FY21), Cost of deposits increased to 4.28% (from 4.27% in previous quarter) and Cost to income ratio went up to 59.89% (vs 52.72% in Q4FY21).
On a positive note, as of end of FY22, asset quality improved as the GNPA^ & NNPA^^ grew to 2.78% & 0.98% (from 3.35% & 1.18% in Q4FY21) respectively.
The company recognized family pension cost and loss on revaluation of Security Receipts during the Q4. Without this expense, operating Profit would have been 35% and 5% respectively and RoA would have been at 1.24%.
Overall deposits grew by 5.25% year on year and CASA** improved to 36.94%.
As of end of Q3FY21, bank had 1,282 branches and 1,885 ATMs all over India.
The bank declared a dividend of Rs. 1.80 per share.

Management Outlook: Management expects RoA (return on assets) possibility of 1.2% over next 4-6 quarters. As per the management, the bank despite of the absorption of a large one-off expense, the ROA and ROE have met the guided levels of 1.03% and 11.93% respectively. The Bank also registered its highest ever Net Profit for a quarter and asset quality has been resilient. Credit cost for FY22 was at a new low at 45 bps.