Lower provisions, Stable asset quality helps Federal Bank to post 50% increase in Net Profit | Q2 FY22 Conference Call Highlights

Management:

Mr. Shyam Srinivasan – MD & CEO

Mr. Ashutosh Khajuria – executive director

Ms. Shalini Warrier – executive director

Mr. Harsh Dugar – group president & country head – wholesale banking

Mr. Venkatraman Venkateswaran – group president & CFO

Mr. Babu K A – senior vice president & head – loan collection & recovery

Mr. Anand Chugh – head – investor relations

Q2 FY-22 Financial performance:

• quarterly net profit which stood at Rs. 460 crore and grew by 50% on a YoY basis.
• NII that grew by 7.2% on a YoY basis despite ~5% growth in advances.
• NIM at 3.20% in Q2 FY22.
• The bank strengthened its provision coverage from 64.65% to 65.43%.
• net NPA came down to 1.12% in Q2 FY22.
• Q2 FY22 ROA at 0.92%, increase of 27 bps YoY and ROE at 10.73%, increase of 264 bps YoY.
• Operating Profit at Rs 865 Cr for Q2 FY22.
• CASA grew by 18% YoY, CASA Ratio for Q2FY22 was at 36.16% at an all time high.
• Retail Deposits at 94% of Total Deposits.
• Market share in personal inward remittances received in the Financial Year increased to 20.54% in Q2 FY22.
• Asset Quality: Net NPA at 1.12%, amongst the best in the industry, PCR at 65.43% in Q2 FY22.
• Balance Sheet and Capital: Balance Sheet size at Rs 2.06 L Cr in Q2 FY22. CRAR at 14.97% in Q2 FY22.
• Steady Growth in Market Share: Market Share in Advances at 1.21%, Market Share in Deposits at 1.07%
• Credit Growth in Chosen Areas: Total Advances grew by 10% YoY, Retail Advances grew by 12% YoY, Agri grew by 20% YoY, Business Banking grew by 11% YoY & Commercial Banking grew by 12% YoY.

Digital Migration:

• 87.5.% of the total transactions were digital transactions.
• 10,800 cr. in terms if monthly mobile banking volume.
• 149% YoY growth in UPI transactions.
• 81% new accounts opened digitally.
• 300+ API’s available in open banking
• No. 1 partner bank of Bharat Pe, Federal bank processes highest number of transactions for Bharat Pe, this was achieved in 8 months. 
• 15 lakhs+ transactions are processed every day.
• There is a YoY growth of 34% in active digital user.
• Digital share stands at 87.50% for the month of Sept 21 and 86% overall.

Credit portfolio distribution:

• 54% of the total loan amount is of retail loans, and the remaining 46% of the total loan amount is of wholesale loans.
• gold loan is roughly about 11.85% of the total loan book. 70% YoY growth, part of it certainly was contributed by the higher gold price per gram.
• Yield on advances in Q2 of FY22 is around 8.11%.

Retail Banking:

• Launched Debit-Card-EMI/BNPL option for Health insurance with
• Niva Bupa
•  Tied-up with Cred Avenue for technology solution to manage
• Direct assignment/securitization portfolio
•  Disbursals through Fintech enabled Gold and Micro lending
• platforms crossed Rs.3800 Cr.
• FedMi – BC microlending platform went live in Q2 and 3 BCs
• onboarded for sourcing MFI business

Wholesale banking:

• Onboarded 62 new clients in CIB and 79 new clients in CoB, across business groups, geographies and
• sectors during the quarter.
• Digital channel adoption and CASA enabling products (Trade and Transaction products) helped Avg
• CASA grow by 41% YoY in CIB and 21% YoY in CoB
•  Average Ticket Size of Wholesale Loan Book (CIB+CoB) : 23 Cr
• Average Ticket Size of CIB & CoB Loans is 56 Cr & 7 Cr Respectively 

Major Investments:

1. Federal Operations & Services Limited (FedServ) – 100.00% stake
2. Fedbank Financial Services Limited – 74.00% stake
3. Ageas Federal Life Insurance Company Limited – 26.00% stake
4. Equirus Capital Private Ltd – 19.89% stake

FedBank Financial Services Ltd. (FEDFINA):

• Crossed Balance Sheet size of Rs 5,100 Cr in Q2FY21.
• 463 branches as at the end of Sept 21 quarter.

External Ratings:

• Fixed deposits (short term) got A1+ rating by CRISIL.
• Certificate of deposits got A1+ rating by CRISIL.
• Tier 2 (Capital) Bonds got AA rating by both India Ratings & Research Pvt Ltd, and CARE