Federal Bank which opened about 140 odd branches in the previous financial year, now plans to open about 100 more branches by FY25, highlighted the bank’s MD & CEO, Shyam Srinivasan in the bank’s quarterly results presser on Wednesday.
He further stated that out of the 100 branches about 35-40 would be opened by the first half of this current financial year.
Srinivasan asserted that all expansions and product launches that the bank has done has ultimately helped the deposit growth come out strongly.
He further highlighted that the bank’s business is not anchored around one product or one segment, but that the bank has tried to keep diversification going, with all of the bank’s business growing about 4-5 per cent each.
Sustainability of Profitability
The veteran banker in the results call further highlighted that sustainability of profitability is required.
“Our objective isn’t NIM maximisation at the cost of other parameters which are working well. Our deposit comeback was also strong,” he said.
“It’s always a balance between quality of credit and quality of income and clearly credit cost at 30 basis points that we’ve delivered indicates that it is absolutely top notch in the industry. Sustainability of profitability is also important. We grew credit at 20 per cent and we grew interest income at 19 per cent so it is completely in tandem,” the banker stated.
Co-branded Credit Cards
Post the RBI’s ban on Federal Bank’s co-branded cards business, the bank had completely stopped issuing co-branded credit cards due to which the bank’s credit card issuances has slumped.
“Post RBI ban we have paused co-branded credit cards and cards that have been added are organic cards which is why a dip in credit card issuances,” highlighted Shalini Warrier, Executive Director, Federal Bank.
“However, the spends are muted for first quarter but that is usually for the entire industry, pick up happens usually from second quarter and is very high in third quarter,” she clarified on the lower credit card spends for this quarter.
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The Bank CEO highlighted that they’re closely working with RBI to get this resolved.
“We’re working with the RBI, we need to make many more submissions, lot of dialogue going on, we will try to phase it out, of course some may get approvals some may get delays,” the bank chief stated.
He further added that there is no particular deadline for all the submissions, the bank needs to be clear on the outsourcing guidelines for lending, IT, how it handles the colending agreement, so lot of discussion on this with the regulator.
In the month of March, the Reserve Bank of India asked Federal Bank to stop issuing new co-branded credit cards. Federal Bank had said that it is rectifying the deficiencies, and will await regulatory approval before issuing new cards.
What does the results say?
Federal Bank on Wednesday reported about 18 per cent jump in standalone net profit at Rs 1,009 crore for the quarter ending June 30, 2024. It reported standalone net profit of Rs 854 crore in the year-ago period.
The private sector lender’s net interest margin (NIM) advanced by 19.5 per cent to Rs 2,292 crore as against Rs 1,918.6 crore in the June quarter last year.
Federal Bank’s deposits grew 20 per cent year on year to Rs 2.66 lakh crore, while net advances rose to Rs 2.20 lakh crore during the April to June period.
Federal bank board has also approved a fund raise of up to Rs 6,000 crore through various securities.
Recently, the Reserve Bank of India approved the appointment of Krishnan Venkat Subramanian as the new MD and CEO for a three-year period, starting September 23, 2024.
The veteran banker was earlier the joint managing director at Kotak Mahindra Bank. The current MD & CEO of Federal Bank, Shyam Srinivasan during the bank’s results presser commented that him and the bank will try everything to make the transition smooth, the team is there and they will take it ahead.
