Federal Bank Q4 PAT up 67% led by healthy loan growth across segments

Federal Bank recorded a net profit of INR 903 crore for the fourth quarter of FY23, up 67 per cent year-on-year driven by strong growth in loans across business segments. For FY23, profit after tax was Rs. 3,011 crore.

Advances to the lender totaled ₹1.8 crore as of March 31, up 20 per cent year-on-year, led by a growth of 22 per cent in agricultural advances, 24 per cent in corporate loans, 18 per cent in commercial bank loans and 17 per cent in Cent cent retail loan growth.

On the earnings call, managing director and CEO Shyam Srinivasan said the retail and wholesale sectors are seeing healthy demand. He said that FY23 was one of the best years for the bank in terms of corporate credit growth and core portfolio quality.

loan growth

Srinivasan pegged loan growth for FY24 at 18-20 per cent, seeing retail, wholesale and gold loans grow around 20 per cent, similar to what we saw in FY23. However, growth could be faster in some retail segments such as credit cards and personal loans, microfinance, and commercial vehicles where the bank is a relatively new entrant with a smaller book.

The bank said that corporate demand is being led by increased demand for working capital led by a recovery in the capital expenditure cycle and capacity utilization levels of about 75 percent, adding that the corporate financing line remains strong.

Net interest income for FY23 increased by 21% at INR 7,232 crore. The net interest margin stood at 3.3 percent.

Srinivasan said the bulk of the impact of the repricing took place in the fourth quarter and there may only be some repricing left in the current quarter as deposit rates likely have peaked assuming interest rates stop. NIMs are expected to remain in the range of 3.33-3.35 percent for FY24.

Bank deposits increased by 17 per cent year on year at ₹ 2.1 crore at the end of March. Total NPA was 2.4 percent and net NPA was 0.7 percent as of March 31.