Federal Bank Q4 Profit Rises By 12%, Flags Downward Pressures On NIMs

Mumbai: Federal Bank’s consolidated profit rose by 12.37 per cent to Rs 1,091 crore for the March quarter, helped by a jump in non-interest income.

On a standalone basis, the private sector bank’s Q4 net moved up to Rs 1,030 crore from Rs 906 crore in the year-ago period.

The core net interest income grew 8 per cent to Rs 2,377 crore from Rs 2,195 crore, and was marginally down when compared with the quarter-ago period’s Rs 2,431 crore.

The non-interest income grew 33 per cent on-year to Rs 1,006 crore, the highest ever under the category achieved by the bank.

The net interest margin narrowed to 3.12 per cent during the quarter from 3.21 per cent.

Its chief executive and managing director, K V S Manian, said nearly half of the bank’s book is linked to the external benchmark of repo rate, and automatically gets repriced with every cut in the policy rate by the RBI.

Speaking with reporters, he said the bank will deploy all efforts possible to protect the NIMs, but conceded that there are “downward pressures,” especially if the RBI’s rate cuts continue.

It will be focusing on both advances and deposits front to protect the margins, he said, adding that it has already initiated a 0.25 per cent cut in the savings account offering earlier this month.

The bank achieved a 13 per cent credit growth in FY25, and aims to continue to have the credit growth at 1.2 times the nominal GDP growth, Manian said.

Even as the system sends mixed signals on these product lines, Federal Bank aims to focus on products such as personal loans and credit cards on the loan book growth front, Manian said, adding that the credit performance is good in the segment.

However, it will stay off microloans, another of the unsecured loan products, as it feels that there is still stress in the segment, he said.

On the costs front, its operating expenses moved up by 8 per cent on quarter to Rs 1,918 crore, primarily because of higher marketing spends in the credit card space.

On the asset quality front, fresh slippages decreased to Rs 483 crore during the quarter from Rs 486 crore in the quarter-ago period, but were higher than the Rs 352 crore in the year-ago period.

A bulk of the fresh slippages came from the retail and agri segments, as per the bank’s disclosure.

The gross non-performing asset ratio declined to 1.84 per cent from 1.94 per cent in the quarter-ago period.

Its overall capital adequacy stood at over 16 per cent, and the core tier-I was over 15 per cent.

The bank scrip closed 3.30 per cent down at Rs 196.60 apiece on the BSE as against a 0.06 per cent correction on the benchmark.

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