Federal Bank reported strong financial performance for the third quarter of FY25, driven by a robust increase in interest income and sustained operational efficiency. The bank’s interest income rose significantly to ₹6,808.73 crore, reflecting a year-on-year (YoY) growth of 18.79% compared to ₹5,730.10 crore in Q3 FY24.
The net profit for the quarter stood at ₹955.44 crore, marking a YoY growth of -5.13%, as it compares with ₹1,006.74 crore in Q3 FY24. This decline was primarily influenced by higher provisions and contingencies during the quarter.
Key Financial Highlights:
- Total Income: Increased to ₹7,724.90 crore, up from ₹6,592.66 crore, reflecting a growth of 17.16% YoY.
- Operating Profit: Improved to ₹1,569.46 crore, compared to ₹1,437.33 crore, growing by 9.18% YoY.
- Gross NPA: Maintained at 1.95%, lower than the previous quarter’s 2.29%, showcasing asset quality improvement.
- Net NPA: Declined to 0.49%, compared to 0.64% YoY, reflecting prudent risk management practices.
Management Commentary Mr. KVS Manian, MD & CEO stated “This quarter has been pivotal for us as we strategically reoriented both the asset and liability sides of our balance sheet, addressing fundamental aspects to position the Bank strongly for the future. We have chosen to focus on granular retail deposit growth instead of high value, expensive deposits. We have also consciously avoided low yielding or high-risk assets for the sake of growth. Notwithstanding this disciplined approach, we have achieved a year-on-year growth of 15% in advances and 11% in deposits, positioning us competitively within the sector. We achieved this with minimal disruption. Our asset quality has reached its strongest levels in a decade. In alignment with our commitment to building a robust foundation, we have undertaken accelerated provisioning for certain riskier asset classes this quarter. We remain steadfast in our focus on building a high-quality franchise that delivers value to all stakeholders whether through superior customer service and relationships, an enhanced employee proposition, or consistent and sustainable earnings quality. As we look ahead, we are optimistic about future opportunities and confident in our ability to create enduring value for all our stakeholders.”
Operational Efficiency:
- Interest Expended: Increased to ₹4,377.39 crore, compared to ₹3,606.74 crore, due to the rising cost of funds.
- Operating Expenses: Stood at ₹1,778.05 crore, compared to ₹1,548.59 crore, representing a 14.8% increase YoY, in line with business growth.
Asset Quality:
The bank demonstrated improvement in asset quality metrics with reductions in both Gross and Net NPA ratios. These improvements align with Federal Bank’s consistent focus on risk containment and portfolio management.
Federal Bank’s focus on expanding its loan portfolio while maintaining tight control over asset quality reflects its strategic initiatives to strengthen financial performance further.
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