Federal Bank has delivered an impressive performance for the quarter ending December, showcasing robust growth across key financial metrics. The private sector bank's net profit climbed 9% compared to the same period last year, reaching ₹1,041 crore. This marks a solid quarter-on-quarter increase as well, highlighting sustained momentum.
Loan and Deposit Growth Highlights
The bank's advances grew by 9% year-on-year, totaling ₹2.65 trillion. This expansion was primarily fueled by strong activity in the commercial and corporate banking segments. Interestingly, deposit growth outpaced loans, rising 15% to ₹2.50 trillion, indicating healthy liquidity and customer trust.
Segment-Wise Performance
Retail loans, which make up 55% of the bank's customer assets, increased by 9% to ₹94,886 crore. The commercial loan book saw a significant jump of 25% year-on-year, reaching ₹28,177 crore. Corporate loans also grew, albeit at a more moderate pace of 5%, amounting to ₹1.42 trillion.
Asset Quality Shows Steady Improvement
Asset quality continued to strengthen during the quarter. The gross non-performing assets (NPA) ratio improved to 1.72%, down from 1.83% in the previous quarter. Net NPA also declined, falling to 0.42% from 0.48%. This improvement was supported by lower slippages of ₹435 crore as of December end, compared to ₹579 crore in the prior quarter.
Core Income and Profitability Metrics
Net interest income (NII) rose over 9% year-on-year and 6% quarter-on-quarter to ₹2,653 crore. Consequently, the net interest margin (NIM) increased by 12 basis points sequentially to 3.18%. This boost was driven by an improved liability mix and effective asset repricing strategies.
Fee income also showed strong growth, surging 19% year-on-year to ₹896 crore. The bank highlighted that NII, operating profit, and fee income each reached all-time highs, reflecting robust core earnings momentum.
Management Commentary
K.V.S. Manian, Managing Director and Chief Operating Officer, stated in a press release, "We are seeing increasing benefits from a stronger liability franchise and a calibrated shift in our asset mix toward segments that deliver superior risk-adjusted returns." He emphasized that cost discipline and prudent risk management remain central to the bank's operations.
Other Key Financial Indicators
The CASA (Current Account and Savings Account) ratio improved to 32.07% as of December end, up 106 basis points on quarter and 191 basis points on year. This indicates a healthier deposit composition. Additionally, the cost-to-income ratio improved to 53.92%, demonstrating continued operating leverage that positively impacted the bottom line.
Market Reaction
Following the announcement of these strong results, shares of Federal Bank rose 8.6% to ₹268.20 on the National Stock Exchange. This market response underscores investor confidence in the bank's performance and future prospects.
