Federal Bank will continue to explore inorganic opportunities but is not in any active discussion on an acquisition, executive director Venkatraman V told NDTV Profit, adding that the lender remains focused on executing its core organic strategies.
The comments came after Federal Bank reported its highest-ever quarterly net profit in Q2FY27. The bank remains focused on executing its core organic strategies, while strong advances growth and improving net interest margins (NIMs) underpin its business outlook.
“We will continue to explore inorganic opportunities,” Venkatraman said, adding that the bank is “not in any active conversation on inorganic acquisition” and remains focused on executing its core organic strategies.
On the growth outlook, Venkatraman said Federal Bank was on track to meet its guidance of mid-teens growth. “Can look at high-teens growth if business is better,” he said, highlighting the potential for stronger expansion if business conditions improve.
The executive director also pointed to strong credit growth, with advances growing 11%, and said the bank had witnessed one of its best current account and savings account (CASA) performances in six to seven quarters.
The bank expects net interest margins to improve going forward, despite a marginal impact from foreign currency non-resident (FCNR-B) deposits during the quarter.
Venkatraman said the lender did not see much impact from FCNR-B on its business.
“Q2 has been one of the best quarters in history,” he said.
Federal Bank Q2 Results: Net Profit Rises 45% YoY
Federal Bank reported its highest-ever quarterly net profit of Rs 1,386.09 crore in Q2FY27, marking a 45.10% year-on-year (YoY) increase and a 17.77% rise quarter-on-quarter (QoQ).
READ | Federal Bank Q2 Results: Net Profit Jumps 45% YoY To Record Rs 1,386 Crore; NII Rises 26%
Net interest income (NII) increased 26.38% YoY to Rs 3,153.40 crore, while operating profit rose 35.35% to Rs 2,225.37 crore. Earnings per share grew 44.34% YoY to Rs 22.26.
The bank's net interest margin (NIM) expanded 26 basis points (bps) YoY to 3.32%. The improvement was supported by a 40 bps decline in the cost of funds and a 39 bps reduction in the cost of deposits to 5.18%.
Other income reached a record Rs 1,490.44 crore, rising 37.73% YoY, while fee income increased 31.86% to Rs 1,167.71 crore. Fee income as a proportion of average earning assets reached an all-time high of 1.11%.
Federal Bank Advances Cross Rs 3 Lakh Crore
Federal Bank's total business franchise crossed Rs 6.4 lakh crore, growing 20.12% YoY. Total deposits rose 18.61% to Rs 3,42,693.56 crore, while gross advances crossed the Rs 3 lakh crore mark to reach Rs 3,01,687.80 crore, up 21.66% YoY.
CASA balances increased 22.56% to Rs 1,09,803.15 crore, taking the CASA ratio up 103 bps to 32.04%.
Growth remained broad-based across the bank's chosen segments. Gold loans grew 37.13% YoY, loans against property (LAP) increased 32.21%, credit cards rose 28.27%, and commercial banking expanded 25.46%.
Federal Bank Asset Quality Improves
Federal Bank's asset quality strengthened further, with gross non-performing assets (NPAs) declining to 1.32% and net NPAs falling to 0.17%, both at decade lows.
Fresh slippages declined 27.48% YoY, while the slippage ratio improved to 0.59% from 0.94% a year earlier. The provision coverage ratio, excluding technical write-offs, rose to 86.78%, while credit cost declined 19 bps YoY to 0.31%.
The restructured book stood at Rs 1,389.55 crore, equivalent to 0.46% of gross advances.
Federal Bank Profitability And Capital Position
The cost-to-income ratio improved 196 bps to 52.08%. Return on assets (RoA) stood at 1.32%, up 23 bps YoY, while return on equity (RoE) rose 256 bps to 13.57%.
The capital adequacy ratio stood at 16.84%, with Tier I capital at 15.76%. Federal Bank added 12 branches during the quarter, taking its network to 1,662 banking outlets.
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