The Federal Bank Limited

Ladies and gentlemen, good day and welcome to the Q2 FY25 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 your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sawvik Roy, Head, Investor Relations, the Federal Bank Limited. Thank you, and over to you, sir.

Thank you, Sagar, and thank you, everyone. A warm welcome to all the participants. We really appreciate your taking the time to join us today. Now, as you're aware, there has been a recent transition in leadership with Mr. K.B.S. Mannion, assuming the role of MD and CEO from Mr. Shyam Srinivasan as of the 23rd of last month. On behalf of the entire bank, we extend a heartfelt welcome to Mr. Mannion, and we are confident that under his guidance, we will reach new heights of success. We have just uploaded the results and our presentation on the exchanges, and in case you could not review them prior to this call, please feel free to call me once this call is over. As always, I'm joined by the senior management and other members of our leadership team to address any questions you may have. I will begin by providing an overview of our progress on key broad-based parameters. Our total business has now reached 4,99,419 crores, with the last one lakh crore added in just over four quarters. This kind of demonstrates a strong foundation for sustained growth. We achieved the highest ever net profit of 1057 crores, reflecting a YY growth of 10.79%, alongside a record operating profit of 1565.36 crores. Our ROA for Q2 stands at 1.28%, with an ROE of 13.65%. In terms of asset quality, we made good strides by bringing down our GNPAs to 2.09%, and net NPAs to 0.57%. Our TCR has also reached a 16-quarter high. Additionally, our NII reached its highest ever level at 2367.23 crores, marking a YOY growth of 15.11%. Our deposit base also saw growth, with total deposits increasing by 15.56% YOY, while total net advances grew by 19.45%, reflecting our strong customer engagement and trust. CASA also showed some solid growth, rising by 11.5% YOY, including a 5% growth in Q1 and 4% in Q2. This positions us among the industry's leaders in CASA growth rate, with our CASA ratio increasing by 80 basis points QOQ. Now, let's move to NR. The inflow in NR accounts has been noteworthy, resulting in a 6.8% growth in NR savings during the first half of FY25, which is a significant turnaround from last year's decline of about a percent and a half. This positive trend spans across our portfolio with an 8.34% YOY increase in NR savings and a 14% YOY growth in FDNR deposits. Our branch banking business remains a strong contributor as always to our granular deposit growth, demonstrating improved attrition despite a challenging deposit environment. Notably, we have achieved this growth without significant concessions on deposit rates, diverging from the broader industry trend of elevated rates. Meanwhile, our wholesale banking business consistently generates stable profits through a diversified revenue base. This strategic breadth mitigates reliance on asset-led revenues alone, strengthening our overall financial resilience. With this, I'll hand it over to our NDN CEO, Mr. K.J. Smani. Over to you, sir.

Thank you, Sowit, and good evening, everyone. Welcome to this post-results call. As this is my first call in the current role, I'll be leaving the substantive part of the heavy-lifting discussion of the quarter's results and its analysis to our capable team. However, I would like to share a few thoughts on the transition. It has been a month since I stepped into this role and about seven weeks since I joined the bank. I had the opportunity of working with Shyam for three weeks during this period of three weeks of transition. and it was invaluable for a smooth transition. I would like to extend my heartfelt thanks to Shyam for his contributions over his 14 years tenure in the bank. I know Shyam will be logged into this call as an investor now, and thank you again, Shyam. I must say that the teams here have given me a very warm welcome, and I feel both optimistic and confident about the path ahead. Over the past weeks, I have embarked on what I call listening tours across the country, meeting with senior zonal teams, bright young managers in the firm, and holding open house forums with a very large cross-section of our employees. These sessions have given me deep insights into the team's aspirations and also the exciting opportunities to work with for the bank. In fact, the energy of our teams has been remarkable and I must admit that their enthusiasm has rubbed off on me and I feel younger. In addition, I have been conducting deep dive sessions with each business unit and functions to understand our current position and identifying growth opportunities. I have also met with customers and key stakeholders and partners and I expect to compete with this structured outreach program somewhere around mid-November to third week of November. These engagements are helping me shape my understanding of the company, businesses, and will be foundational to a strategy refresh that we as a team are working on, which we will present to our board somewhere in the month of December. And this, in turn, will guide our future discussions with all of you. On a lighter note, I have also encountered many people eager to set new targets for me. Jokes aside, I understand the external expectations around key metrics that are used to evaluate banks and the aspirations you hold for this bank's future. Of course, that's just the beginning, identifying the metrics. The key lies in the plan on the how side of it. I am pleased to say that our team is ready to push forward on this journey. We are aware of the broader challenges facing our sector and recognize that the path may not exactly be what we thought of it a year ago. Nevertheless, we remain confident in our direction. Together, we are constantly thinking about the next level, as we all call it, and we have already begun to implement new strategies. For example, we are placing renewed focus on CASA and deposit growth supported by our newly secured AAA rating on the deposit program. Our goal remains to be the most admired bank and we are committed to adding momentum to this vision. But of course more on this and details on this in the next meeting we have. We are grateful for the support of our board and the trust all of you shareholders place on us as we embark on this journey. I seek your continued patience and support as we work towards an exciting future from here. Thank you and we are now open for questions.