Federal Bank is not in active discussions to acquire any acquisition in the microfinance space, Executive Director Venkataraman V told NDTV Profit, amid speculation that the lender was considering a microfinance acquisition.
The bank will continue to evaluate acquisition opportunities but remains focused on organic growth, Venkataraman said. “At this stage, there's no active consideration of any inorganic opportunity,” he said on Monday, adding, "We will constantly evaluate inorganic opportunities because, as you know, we have stated our ambition to be a universal bank."
Venkataraman did not name any bank or identify a potential acquisition target while responding to a question about the speculation. His comments came after CNBC-TV18 reported last month that Federal Bank was looking to acquire a controlling stake in Jana Small Finance Bank and that the two lenders were likely at an advanced stage of discussions.
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Federal Bank shares recovered after Venkataraman's comments, while Jana Small Finance Bank shares continued to trade near the day's low.
“We do believe that small portfolio and small acquisitions always help us rather than something very big. So a string of pearls approach is something which we are looking at,” Venkataraman said, explaining the bank's approach to potential acquisitions.
He said Federal Bank would assess opportunities in businesses such as securities, wealth management and small and medium enterprises, provided a deal was accretive and aligned with its strategic objectives.
Federal Bank Sees 11% Advance Growth
Venkataraman said the bank was seeing 11% growth in advances and remained on track to meet its guidance for mid-teens growth. It could consider high-teens growth if business conditions improved.
He also expects net interest margins to improve, after a marginal impact from foreign currency non-resident (FCNR-B) deposits.
The bank recorded one of its strongest current account and savings account (CASA) performances in six to seven quarters, he said, adding that FCNR-B deposits were unlikely to have a significant impact on its business.
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