Federal Bank Ltd Q4 FY21 Conference Call Highlights

Management:

Mr. Shyam Srinivasan – MD & CEO

Mr. Ashutosh Khajuria – executive director

Ms. Shalini Warrier – executive director

Mr. Harsh Dugar – group president & country head – wholesale banking

Mr. Venkatraman Venkateswaran – group president & CFO

Mr. Babu K A – senior vice president & head – loan collection & recovery

Mr. Anand Chugh – head – investor relations

Q4 FY-21 Financial performance:

• Highest ever quarterly net profit which stood at Rs. 478 crore and grew by 59% on a YoY basis.
• NII that grew by 17% on a YoY basis despite 9% growth in advances.
• NIM improved by 19 basis points to 3.23%.
• The bank’s board also recommended dividend of 35% that is Rs. 0.70 per equity share on face value of Rs. 2.
• The bank strengthened its provision coverage of 53.39% to 65.14%.
• net NPA came down to 1.19%.
• The bank also crossed milestone figure of Rs. 3 lakh crores in terms of total business
• Q4 FY21 ROA at 1.02%, increase of 33 bps YoY and ROE at 12.20%, increase of 379 bps YoY.
• Operating Profit at Rs 885 Cr for Q4.
• CASA grew by 26% YoY, CASA Ratio for Q4FY21 was at 33.81%.
• Retail Deposits at 90% of Total Deposits.
• More than ₹one trillion inward remittances received in the Financial Year.
• Asset Quality: Net NPA at 1.19%, amongst the best in the industry, PCR increased from 53.39% to 65.14% on a YoY basis.
• Balance Sheet and Capital: Balance Sheet grew by 11% YoY (Rs 2.01 L Cr) Total business crossed milestone figure of 3 L Cr, grew 11% YoY (Rs 3.04 L Cr), CRAR at 14.62%
• Steady Growth in Market Share: Market Share in Advances at 1.19%, Market Share in Deposits at 1.11%, Market Share in Personal Inward remittance business increased to 17.54%.
• Income and Cost Streams: Robust traction in NII at 1420 Cr, grew by 17% YoY, against credit growth of 9%, Highest ever Core Fee Income at 363 Cr, Other Income at 465 Cr, Cost to Income at 53.06%, NIM at 3.23%, an increase of 19 bps YoY, despite interest reversals.
• Credit Growth in Chosen Areas: Total Advances grew by 9% YoY, Retail Advances grew by 19% YoY, Gold loans grew by 70% YoY, Business Banking grew by 13% YoY & Commercial Banking grew by 11% YoY.

Asset Quality:

• COVID Specific Restructuring was done in Q4 of FY21 which was Rs 718 cr (1.04% of total advance) and the total restructuring for FY21 was Rs 1409 cr.
• 68%-70% of this restructuring is fully backed by securities.
• Increase in Stressed book on account of COVID Specific Restructuring
• The collection efficiency of Q4 FY21 was around 95%.
• PCR increased from 53% to 65% on a YoY basis
• Corporate Book holding well with no major accounts in Watch List
• The bank got 76% A and above rating in External Rating of Corporate Advances.

Digital Migration:

• 86% of the total transactions were digital transactions.
• 10,600 cr. in terms if monthly mobile banking volume.
• 167% YoY growth in UPI transactions.
• 84% new accounts opened digitally.
• No. 1 partner bank of Bharat Pe, Federal bank processes highest number of transactions for Bharat Pe, this was achieved in 8 months. 
• 15 lakhs+ transactions are processed every day.
• There is a YoY growth of 21% in active digital user.
• Digital share stands at 85.36% for the month of March 21 and 86% overall.

Credit portfolio distribution:

• 54% of the total loan amount is of retail loans, and the remaining 46% of the total loan amount is of wholesale loans.
• gold loan is roughly about 11.85% of the total loan book. 70% YoY growth, part of it certainly was contributed by the higher gold price per gram.
• Yield on advances in Q4 of FY21 is around 8.40%.

Retail Banking:

• Bank’s partnership with Epifi for its neo banking went live, which offers an interactive, personalized, and transparent digital banking experience
• Launched outward remittance platform –Fed e Remit for Resident Individuals and NRIs to remit funds from India.
• Disbursals through Fintech enabled Gold and Micro lending platforms crossed Rs.3000 Cr. One more Fintech tie-up for Doorstep gold loan with Orocorp Technologies launched.
• Strategic tie up with ICICI Securities to offer online trading services to customers.

Wholesale banking:

• Focus on New name acquisition continues to yield result with 148 NTB clients in CIB and 164 NTB clients in CoB during the FY, higher than the previous year despite pandemic. These include several marquee names across sectors and geographies.
• Digital Banking –Launched eNach and online CP issuance seen further traction with new client additions. More than 80% of total transaction is done through Digital channel now.
• Average Ticket Size of Wholesale Loan Book (CIB+CB): 22 Cr
• Average Ticket Size of CIB & CB Loans is 56 Cr & 7 Cr Respectively

Major Investments:

1. Federal Operations & Services Limited (FedServ) - 100.00% stake
2. Fedbank Financial Services Limited - 74.00% stake
3. Ageas Federal Life Insurance Company Limited - 26.00% stake
4. Equirus Capital Private Ltd - 19.90% stake

FedBank Financial Services Ltd. (FEDFINA):

• Crossed Balance Sheet size of Rs 5,000 Cr in Q4 FY21.
• FY21 PAT increased by 48% to ₹ 59 Cr (₹ 40 Cr FY20).
• Increase in Collection Efficiency post lockdown.
• Collection Efficiency % for instalment loans at 96% of the pre-COVID level.

External Ratings:

• Fixed deposits (short term) got A1+ rating by CRISIL.
• Certificate of deposits got A1+ rating by CRISIL.
• Tier 2 (Capital) Bonds got AA rating by both India Ratings & Research Pvt Ltd, and CARE.