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

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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

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