Fedbank Financial Services (FEDFINA) Q3 23/24 earnings summary

Executive summary

• Q3 FY24 PAT was ₹654 mn, up 28% YoY; AUM reached ₹107,139 mn, up 34%, and disbursements were ₹33,441 mn, up 24%.

• Q3 RoA was 2.5% and RoE 14.3%; CARE upgraded long-term instruments to AA+/Stable and CRISIL assigned AA/Positive to NCDs.

• Mortgage LGD assumptions rose from 20% to 23%, adding ₹85.6 mn to Q3 provisions.

• Q3 total income was ₹42,945 lakh and net profit ₹6,540 lakh; 9M FY24 net profit was ₹17,705 lakh.

• Unaudited results received an unmodified limited-review opinion; the Board approved an amendment to the 2018 employee stock option scheme, subject to shareholder ratification.

Financial highlights

• Q3 FY24 total income was ₹4,294 mn; net interest income ₹2,166 mn, up 31% YoY, and operating profit ₹1,105 mn, up 44% YoY.

• Q3 FY24 PBT was ₹878 mn and PAT ₹654 mn, versus ₹662.7 mn and ₹511.7 mn in Q3 FY23.

• Q3 FY24 disbursements were ₹33,441 mn; AUM was ₹107,139 mn, up 34% YoY and 7% QoQ.

• Q3 FY24 net total income was ₹2,537 mn, operating expenses ₹1,432 mn and credit cost ₹227 mn.

• 9M FY24 PBT was ₹23,723 lakh and net profit ₹17,705 lakh, versus ₹18,814 lakh and ₹14,109 lakh in 9M FY23.

Outlook and guidance

• Management expected disbursement growth to continue in Q4 and guided to 25% compounded growth from current levels, with an aim to exceed that rate.

• Standardized credit cost is expected at ~80 bps; Q3's 90 bps annualized cost included episodic write-offs and a one-time mortgage provision uplift.

• NIMs are expected to remain at least at current levels, with possible improvement from product mix, co-lending, the rating upgrade and equity proceeds.

• No new products are planned in the foreseeable future; focus remains on optimizing existing products and operating models.

• IPO net proceeds are earmarked to augment Tier I capital for expected business and asset growth; no utilisation deviation was reported.