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

Executive summary

• Achieved highest-ever quarterly net profit of ₹1,010 crore (INR 1,010 crore), up 18% year-over-year and 11% sequentially, with record operating profit of ₹1,501 crore, reflecting strong operational execution and market share gains in both credit and deposit growth for Q1 FY25.

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

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

• Leadership transition is underway with a successor identified, ensuring continuity in strategy and execution.

• 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; total expenses rose 29% to ₹5,745 crore.

• Net profit reached an all-time high of ₹1,010 crore for the quarter; operating profit also hit a record at ₹1,501 crore.

• Other income benefited from ₹90 crore in PSLC, ₹45-50 crore from investment revaluation, and ₹30 crore recovery from written-off pool.

• Cost-to-income ratio stands at 53%, with a target to reduce to 50% over the next 4-6 quarters.

• 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.

• ROA guidance is to improve from 1.27% to 1.30-1.35% by year-end.

• Margins expected to remain stable for the next couple of quarters, with ongoing review based on deposit pricing dynamics.

• 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.