The Federal Bank Limited

Ladies and gentlemen, good day and welcome to the Q4 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 Start and 0 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Shouvik Roy, Head, Investor Relations, The Federal Bank Limited. Thank you and over to you, sir.

Thank you so much and good evening, ladies and gentlemen. Thanks for joining us this evening. I hope you had the opportunity to review our results and go through the investor deck which we had already shared earlier. As always, we are here with our entire senior leadership team who will provide a comprehensive overview of the quarter that went by and our strategic priorities moving forward. We'll begin with our CFO who will walk you through the key financial highlights and the performance metrics for the last quarter. Following his remarks, our MD will share insights on our strategic direction and we'll then open the floor for your questions. So without further ado, I'll hand it over to our CFO.

Thank you, Savik. Good evening, all of you. Ladies and gentlemen, thank you for joining this earnings call. Apologies for this 10-minute delayed start. Let me begin with a brief overview of the macroeconomic and banking sector backdrop. The Indian economy remained resilient amid global uncertainties. This was also bolstered by stable domestic demand and prudent monetary policy. RBI's repo rate cut and liquidity enhancing measures will ensure that the economic focus on growth continues. Inflation is now within the RBI band, and with increased liquidity, banks should be in a position to support growth. The banking sector experienced intensifying competition for retail and MSME departments. Asset quality remained stable with improvement in recoveries, though challenges persisted in certain unsecured segments. Our bank navigated this environment by prioritizing growth in the mid-yielding, mass affluent and MSME segments to drive sustainable profitability and ensure quality growth. Turning to our FY25 quarter and full year performance, I'm happy to share a few highlights. We crossed a major milestone of 5 lakh crore business 5.18 lakh crore was the 31st March number, which marked a significant milestone, and our net profit entered the league of 4,000 crore plus. Our other income soared to a new high of 1,006 crore, driven by robust fee-based services. Our NIM improved by 3.12% to 3.12 by one basis point, despite a rate cut. And As you know, more than half of our book is back to external benchmark, showcasing our agility in a dynamic rate environment. Core fee income grew at 6% QOQ, outpacing asset growth, reflecting our team's alignment towards a more rewarding franchise. We achieved our decadal best asset quality, supported by strong recoveries and arrested slippages. A feat we have consistently delivered, every quarter, even in a tough macro environment. Credit cost for FY25 was 38 bps in line with our earlier guidance of 35 to 40 bps. On the deposit front, CASA grew by a very healthy 6.74% QOQ. And more importantly, car growth happened at a very, very strong 27% QOQ and 35% YOY. The focus on liability growth is yielding results. On the asset side, loans against property grew 20.5% year-on-year, gold loans grew 21% year-on-year, despite a slowdown in Q4 due to certain regulatory guidelines. And our microfinance portfolio grew 19% despite we taking a conscious call to stall or rather to slow down the growth and not grow in Q3 and Q4. CVC grew at 35% year-on-year, and credit card business grew at 19%. All of these play to the plan which we had outlined in our analyst day of focusing on the mid-yielding segments. Our CLAR stood at a healthy 16.4%, positioning us for a self-sustaining franchise. In terms of distribution, we opened 85 branches during the year, and we were quite careful in terms of choosing the locations of this expansion. On the quarterly results, net profit for the quarter was 1,030 crore, up 14% year-on-year, driven by strong revenue growth and operational efficiency. On cost, we had a few one-off costs in the OPEX, which, and traditionally in Q4, our cost is always higher as compared to the other quarters. And in this quarter, we had a few one-offs, which was more towards the branch expansion. We had almost 39 of the 85 branches opened in Q4. Our spends on campaigns, advertisement on card campaigns, and a few other related expenses increased the cost. And hence, you see a slightly uptake in this quarter. Having said that, our OPEX 2 assets for this year, FY25, is one bit slower than last FY25. On the balance sheet, total deposits grew 6.5% quarter on quarter to 2.83 lakh crore. And CASA deposits at 85.7 lakh crore, up 6.74% QOQ. Our CASA ratio was at 30.23, better than last year's CASA ratio. Advances rose 12% this year to 2.38 lakhs. Our CD ratio was at a very comfortable 82.79 in Q4, ensuring balanced growth and liquidity. The focus on LCR continues, and we saw impressive results in this quarter in that direction. We de-grew our wholesale deposits from financial entities. It's ensured that our LCR improved further, and as of 31st March, it was at 145. Asset quality, as I mentioned earlier, is robust. with GNPA at 1.84% of advances, down 11 BIPs QOQ, and NNPA at 0.44%, stable sequentially. These strengthen our provision coverage to 75.37%, over 400 BIPs improvement over last year. Our capital position is strong, with CET1 ratio at 15.04, well above regulatory requirement, providing ample headroom for growth. ROA was 1.24, up two bits over last year. And ROE was 12.82%, underscoring our progress towards sustainable profitability. Strategically, we have accelerated our focus on mid-yielding segments, which Mr. Mannion will cover in his update. Before I hand over to Mannion for his comments, I want to take this opportunity to thank our ED Michelin Warrior as this will be her last earnings call with Federal Bank. I want to take the opportunity to thank her on all our behalf for the excellent contribution and guiding the bank during the last. Thank you so much. Thank you very much, Venkat.