The Federal Bank (FEDERALBNK) Q1 24/25 earnings summary

Executive summary

• Achieved highest-ever quarterly net profit of ₹1,010 crore (₹100,953 lakhs standalone), up 18% year-over-year and 11% sequentially, with operating profit at ₹1,501 crore (₹150,091 lakhs standalone), reflecting strong operational execution and market-leading credit and deposit growth.

• Net interest income reached an all-time high of ₹2,292 crore, up 19% year-over-year and 4% sequentially, with fee income up 22% year-over-year to ₹652 crore and other income at ₹915 crore, up 25% year-over-year.

• Diversified business strategy led to sequential growth of 4%-5% across nearly all segments, with significant recovery in deposit growth and reversal of previous growth challenges.

• Leadership transition planned with a successor identified, ensuring continuity as the senior team remains intact.

• Board approved unaudited results on July 24, 2024, with an unmodified review report from auditors.

Financial highlights

• Total income grew 26% year-over-year to ₹7,246 crore (standalone ₹724,606 lakhs; consolidated ₹766,365 lakhs), with net profit at ₹1,010 crore and operating profit at ₹1,501 crore, both highest ever for a quarter.

• Cost-to-income ratio improved to 53.20% from 62.35% sequentially, with a target to reduce to 50% over the next 4-6 quarters.

• CASA ratio at 29.27%, NRE deposits at an all-time high of ₹76,916 crore, and capital adequacy ratio (CRAR) at 15.57% with Tier I at 14.17%.

• Credit cost contained at 27 basis points for the quarter, with guidance to operate at 30-35 basis points for FY25.

• Net worth crossed ₹30,000 crore; book value per share increased to ₹123.80.

Outlook and guidance

• Expectation to sustain 18%-20% deposit growth, with continued market share gains and ongoing product/process innovation.

• Margins expected to remain stable for the next couple of quarters, with review thereafter.

• Credit cost guidance maintained at 30-35 basis points for FY25.

• Other income targeted to reach 1% of assets, up from current 0.8%-0.9%.

• Implementation of new RBI investment portfolio guidelines from April 1, 2024, impacts comparability of investment income and profit for the quarter.