Federal Bank Q3 Results Review - Earnings Beat On Benign Asset Quality Metrics: Systematix

Systematix Report

Federal Bank Ltd. reported Q3 FY24 earnings, of Rs 10.1 billion, which were above estimates aided by treasury gains - including sale proceeds from the Fedfina Initial public offering listing.

Gross advances growth of 6% QoQ (3% QoQ adjusted for interbank participatory certificates sale) was driven by large corporate loans with retail and small and medium enterprise loans contributing in equal measure. Computed net interest margin declined 4 basis points with cost of funds increasing 18 bps QoQ whilst corresponding yield on advances increased 8 bps QoQ.

Operating expenses remained elevated with core cost to income ratio increasing 2% QoQ. Gross slippage run rate reverted to the usual 1% mark whilst net non-performing assets ratios remained stable at 64 bps with credit costs increasing to 31 bps (Q2 FY24: 13 bps).

Overall, Federal Bank reported return on assets of 1.38% and return on equity of 14.8%.

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