Federal Bank Q1 Results: Profit Up 18% On Higher Other Income

The Federal Bank Ltd.'s net profit for the first quarter of fiscal 2025 rose, beating analysts' estimates.

The private sector bank's standalone net profit stood at Rs 1,010 crore in the three-month period ended June, according to an exchange filing on Wednesday. Analysts polled by Bloomberg had estimated a profit of Rs 943.91 crore.

Net interest income, or core income, for the bank rose 19% year-on-year to Rs 2,292 crore. Other income was up 25% to Rs 915.1 crore.

• Net profit at Rs 1,010 crore versus Rs 854 crore, up 18.2% (YoY).

• Net interest income at Rs 2,292 crore versus Rs 1,919 crore, up 19% (YoY).

• Gross NPA at 2.11% versus 2.13% (QoQ).

• Net NPA flat at 0.6% (QoQ).

Asset quality for the lender was flat with gross non-performing asset ratio improving 2 basis points quarter-on-quarter to 2.11%. Net NPA, too, stayed flat sequentially at 0.6%.

Its operating expenses rose to Rs 1,706.2 crore, up 26.5% year-on-year. Here, employee costs rose 19.6% year-on-year to Rs 738 crore and other opex rose 32.2% year-on-year to Rs 968.2 crore.

Fresh slippages increased 18.4% quarter-on-quarter to Rs 417 crore. Provisions for the quarter, however, fell 7% year-on-year to Rs 144.2 crore.

Credit cost at 30 bps indicates that it is among the best in the industry, said Shyam Srinivasan, managing director and chief executive officer, in a post result media briefing.

The current account and savings account ratio stood at 31.85%, down 83 bps, compared to the previous quarter, where it stood at 32.68%. On a yearly basis, it narrowed 258 bps.

The net interest margin, a core profitability indicator, contracted 5 bps quarter-on-quarter and stood at 3.16%.

The bank's net advances grew 20.3% year-on-year to Rs 2.20 lakh crore. Retail advances grew 19.75% and stood at Rs 70,020.08 crore, business banking grew 20.45% year-on-year to Rs 18,159.34 crore, and commercial banking grew 23.71% to Rs 22,687 crore.

Srinivasan said that the bank is keeping a tight vigil on the microfinance book.

Total deposits, too, grew 20% year-on-year and stood at Rs 2.22 lakh crore.

On July 22, Reserve Bank of India approved the appointment of KVS Manian, former joint managing director of Kotak Mahindra Bank Ltd., to be the next chief executive officer of Federal Bank.

Srinivasan's term is set to end in September, after which Manian would take over.

After the third-quarter results, Srinivasan had said that the RBI was not inclined to offer a one-year extension to him for the role of MD and CEO. Hence, as part of succession planning, the board will send new candidates' names to the regulator by April or early May. NDTV Profit had reported earlier that veteran banker Manian was being tapped for the CEO's office.

The bank expects management transition to be smooth and any large organisation should always remain a work-in-progress, Srinivasan said.

When asked about if he had any future plans of being associated with Federal Bank, he said he won't be associated with the bank's board directly or indirectly.

However, if any opportunities with the board(s) of group companies open up, he would be open to them.

In March, Federal Bank stopped customer onboarding for its co-branded credit cards. NDTV Profit previously reported that Reserve Bank of India's concerns with data storage forced the bank to shut its deal with OneCard.

Responding to questions on this, Srinivasan said that the bank was working with RBI and there are still some submissions that need to be made.

Some issues related to handling of IT etc., are also being discovered, he said. However, the bank should get some closure on this issue either by Q2 or early Q3, he said.

The bank has also moderated incremental growth of fintech accounts, Srinivasan said.