Federal Bank Q4 net zooms 62 pc; targets 20 pc loan growth in FY24

South-based lender Federal Bank on Friday reported a 62 per cent jump in its March quarter consolidated net profit at Rs 953.91 crore, driven by profit booking on the sale of investments.

The private sector lender's net profit for FY23 increased to Rs 3,164.72 crore from the year-ago period's Rs 1,969.79 crore.

For the reporting quarter, its core net interest income grew 25 per cent to Rs 1,909 crore. However, it was the other income line, which reported a 58 per cent growth to Rs 734 crore for the January-March period, which helped it post the highest-ever net profit.

The bank's analyst presentation said it booked a profit of Rs 192 crore on the sale of securities and other receipts against Rs 12 crore in Q4 FY22, which helped the most to the other income stream.

Its net interest margin widened to 3.31 per cent for the reporting quarter from 3.16 per cent in the year-ago period but was down when compared to the preceding December quarter's 3.49 per cent.

Its managing director and chief executive Shyam Srinivasan told reporters that it will aspire to keep the NIMs between 3.30-3.35 per cent in FY24.

Pointing to the narrowing in the number on a sequential basis, which happened due to the faster increase in deposit rates, Srinivasan said there can be some residual impact of the same in the April-June period as well.

However, he feels that the deposit rates have peaked in the system and it will not face difficulties on the NIM for the remainder of the year.

On the advances side, the bank posted a 20 per cent growth, driven by a 23 per cent growth in corporate loans.

As per the bank, the pipeline for corporate loans is strong across sectors and geographical pockets of the country and it will continue to report handsome growth on this front.

When asked about worries over irrational pricing in the corporate loan market to bag more business, Srinivasan said the bank's approach is relationship driven and it generally likes to be among the top lenders to a given company rather than ranking lower down in the list of lenders. Srinivasan said at an overall level, the bank is aiming for loan growth of 18-20 per cent in FY24. A sixth of its overall loans can be classified as unsecured, Srinivasan said, adding that it will continue to expand on personal loans, microlending and credit cards going ahead as well.

The bank reported a deposit growth of 17 per cent for the reporting quarter, and its executive director Shalini Warrier said there was a slowdown in the accretion from the non-residents front.

The bank is going beyond its favourite catchment of the Middle East, and upping its selling efforts to the diaspora in countries like the US, Germany and Ireland, she added. On the asset quality front, it reported an improvement with the gross non-performing assets ratio declining to 2.35 per cent as of March 31, 2023, from 2.78 per cent a year ago.

The gross slippages inched up to Rs 436 crore from Rs 398 crore in the December quarter and Rs 358 crore in the year-ago period. The overall provisions increased to Rs 125 crore as against Rs 84 crore in the year-ago period. Its overall capital adequacy stood at 15.24 per cent as of March 31, 2023, against 13.81 per cent in December and 16.33 per cent in March 2022.

The Federal Bank scrip closed 8.32 per cent down at Rs 127.80 a piece on the BSE on Friday compared to a 1.13 per cent correction on the benchmark.