Lower provisions, Stable asset quality helps Federal Bank to post 50% increase in Net Profit | Q2 FY22 Conference Call Highlights

Published on 15 November 2021
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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

The quarterly net profit which stood at Rs. 460 crore and grew by 50% on a YoY basis.
NII that grew by 7.2% on a YoY basis despite ~5% growth in advances.
NIM at 3.20% in Q2 FY22.
The bank strengthened its provision coverage from 64.65% to 65.43%.
net NPA came down to 1.12% in Q2 FY22.
Q2 FY22 ROA at 0.92%, increase of 27 bps YoY and ROE at 10.73%, increase of 264 bps YoY.
Operating Profit at Rs 865 Cr for Q2 FY22.
CASA grew by 18% YoY, CASA Ratio for Q2FY22 was at 36.16% at an all time high.
Retail Deposits at 94% of Total Deposits.
Market share in personal inward remittances received in the Financial Year increased to 20.54% in Q2 FY22.
Asset Quality: Net NPA at 1.12%, amongst the best in the industry, PCR at 65.43% in Q2 FY22.
Balance Sheet and Capital: Balance Sheet size at Rs 2.06 L Cr in Q2 FY22. CRAR at 14.97% in Q2 FY22.
Steady Growth in Market Share: Market Share in Advances at 1.21%, Market Share in Deposits at 1.07%
Credit Growth in Chosen Areas: Total Advances grew by 10% YoY, Retail Advances grew by 12% YoY, Agri grew by 20% YoY, Business Banking grew by 11% YoY & Commercial Banking grew by 12% YoY.

87.5.% of the total transactions were digital transactions.
10,800 cr. in terms if monthly mobile banking volume.
149% YoY growth in UPI transactions.
81% new accounts opened digitally.
300+ API’s available in open banking
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 34% in active digital user.
Digital share stands at 87.50% for the month of Sept 21 and 86% overall.

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 Q2 of FY22 is around 8.11%.

Onboarded 62 new clients in CIB and 79 new clients in CoB, across business groups, geographies and
sectors during the quarter.
Digital channel adoption and CASA enabling products (Trade and Transaction products) helped Avg
CASA grow by 41% YoY in CIB and 21% YoY in CoB
Average Ticket Size of Wholesale Loan Book (CIB+CoB) : 23 Cr
Average Ticket Size of CIB & CoB Loans is 56 Cr & 7 Cr Respectively

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