The Federal Bank Limited

Ladies and gentlemen, good day and welcome to the Q3 FY24 earnings conference call of the Federal Bank Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Savik Roy, Head, Investor Relations, the Federal Bank Limited. Thank you and over to you, sir.

Thank you so much. Good afternoon and a warm welcome to our Q3 earnings call. I wish you all a very happy new year. I'm sure you've had a chance to delve into our numbers. It's evident they are not just good, they are quite promising. This quarter, we achieved a historic milestone with our first ever four-digit profit number reaching an impressive 1,007 crores. Our NII2 has soared to new heights, standing at an all-time high as well. The strategic expansion of our branch network remains robust. We added close to 65 new branches in H1, 30 of which materialized in the last quarter itself. Our commitment to growth, asset quality, and ROA is paying off quite well, and it's evident in our strong performance across these metrics. Both ROA and ROE, as you already see, are on a trajectory that aligns with our strategy goals as well. The listing of our subsidiary Fedfinna in the last quarter was a standout success, and they do mark their best quarter ever. They just gave out their numbers yesterday. While we acknowledge a slightly elevated credit cost this quarter, it's essential to highlight that it has outperformed our earlier guidance, and we are sure that we'll navigate these dynamics quite well. Please inform all of you that our entire senior management is on this call, and with this, I'll hand it over to our MD to share his insights and perspectives that went by. Over to you, sir.

Thanks, Javed. Good afternoon, everybody, and once again, happy 2024 to everybody. The numbers and the highlights that Shabit pointed out certainly are noteworthy. I am particularly pleased that we did get to that four-digit number. Having been a fair amount of years in this job at some stage many years ago, this looked like a dream, and I'm pleased that our bank has consistently worked our way up to get to this point, and this looks like a new base of which we will work to make sure that the periods ahead are only better. Business momentum for us has been fairly strong along the lines we've been guiding for in the high teens closer to 20. Some of our newer businesses are on course and traction is strong. Environment continues to be challenging for everybody, no less for anybody. I think there will be, there is, and it's likely to remain for a while in terms of the cost of deposits being high. The traditional stronghold of banks able to grow savings at will in a high interest rate environment continues to be sober. That said, our retail deposits are strong. We're still in the high 90s in terms of our deposits being retail in nature. Having said that, the overall CASA, in particular SA growth, and in particular NRSA, is seeing a material change from its past period. Business-wise, credit quality-wise, growth-wise, market share-wise, I remain confident that the momentum, the trajectory, the plans that we put in place are working, some better than others. Credit quality in particular, like Shaui just pointed out, there was one account which was about 70-odd crores slipped in this quarter. It's been our highest per account slip in a long period of time. Thankfully, this quarter, I mean Q4, that account will get upgraded because the client had a fire in their factory and that seems to have come through and they've sorted it out. So we are hoping that that account too will get restored. So overall momentum for business, despite challenging environment, still is intact. I do believe in Q4 we will repeat the same underlying business growth momentum. and that should keep the structural changes going quite well. That said, Q4, there are some challenges in terms of the impact of what may happen on the AIF and what may happen on account of higher costs for provisions in pension. Those are things we are working through, but underlying business, granularity of business, business mix, productivity at individual level, our influence of technology, use of AI, our structural changes that we are putting in place, the business mix, retail, wholesale, within retail, the kind of business we want on the secured and unsecured, the new age businesses. I'm pleased that we haven't taken our eyes off, that traction continues. Through the cycle, there will be ups and downs in terms of interest rate movements. I think we are learning to weather that and still deliver our promised growth on return ratios principally on ROA and ROE, and I'm quite inclined to believe that the period ahead should reflect all this in the numbers, and the federal story will continue quite impressively. So with that as my opening remarks, as always, me and the entire CDM team are there, happy to take questions from any or all of you. Thank you very much.