Fedbank Financial Services (FEDFINA) Q2 24/25 earnings summary

Executive summary

• Q2 AUM reached ₹142.2bn, up 7.8% QoQ and 41.8% YoY, with growth across mortgage and gold loans.

• PAT was ₹645.5mn, up 11.8% YoY and down 8.1% QoQ; annualized RoA was 2.1% and RoE 10.9%.

• Gross Stage III improved to 1.9%, while credit costs and ECL provisions increased; management took a cautious approach to small-ticket mortgage lending.

• H1 total income rose to ₹1,01,008 lakh from ₹76,582 lakh YoY, and net profit increased to ₹13,478 lakh from ₹11,164 lakh.

Financial highlights

• Disbursements were ₹38,104mn, up 29.9% YoY and down 23.9% QoQ; quarterly AUM growth reached a record ₹1,030 crore.

• Q2 total income was ₹51,909 lakh versus ₹39,795 lakh YoY; net total income was ₹3,049mn, up 31.9% YoY, and net interest income was ₹2,649mn.

• Operating profit was ₹1,263mn, up 37.0% YoY; PAT was ₹645.5mn, up 11.8% YoY and down 8.1% QoQ.

• Interest expenses were ₹2,142mn, operating expenses ₹1,786mn and credit cost ₹399mn, versus ₹148mn in Q2 FY24.

• H1 finance costs rose to ₹41,665 lakh from ₹33,049 lakh, while impairment expense increased to ₹7,504 lakh from ₹2,546 lakh.

Outlook and guidance

• FY25 AUM growth of 30%–35% was viewed as achievable; medium-term growth guidance remains 25%+, with higher growth considered opportunistic.

• FY25 ROA target was reset to maintain FY24’s 2.4%, versus prior Q1 guidance of 2.7%–2.75%.

• Management expects credit costs near 1% on an ROA-tree basis; FY25 outcomes remain dependent on portfolio and macro conditions.

• Cost-to-AUM improvement of ~30 bps for FY25 remains possible, subject to growth; Q3 funding costs may be steady or slightly higher than Q2.

• Small-ticket mortgage growth may slow marginally in Q3 as underwriting is recalibrated; Q4 direction will depend on conditions entering that quarter.