The Federal Bank Limited

And welcome to Q1 SI26 earnings conference call of the Federal Lines Limited. As an reminder, all participants' 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 this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. And now, in the conference, over to Mr. Sourav Kauri. Head, Investor Relations, the Federal Bank Limited. Thank you and over to you, Mr. Roy.

Thank you so much and good evening, everyone. Thank you for joining us, especially on a weekend. I've got quite a few messages over the past couple of days asking if Saturday is going to be the new normal for our earnings call. Well, I can assure you it's still undecided and we promise you this wasn't by design. As always, I'm joined by our full leadership team led by our Indian CEO along with our executive directors and senior business heads. We'll start with some strategic updates from our MD, followed by the CFO walking you through the financials and business performance for the quarter. After that, we'll of course, as always, open the floor for discussions and questions. With that, over to you, sir.

Thank you, Shobhit. Good evening, everyone. Thank you for joining us this Saturday evening. Before we dive into the quarterly numbers, let me make some introductory remarks. While we will present to you a detailed review of our strategy implementation in January 2026, about a year after we first announced it, I thought a quick and a short interim update on the same may be useful. Earlier this February, when we introduced Federal 4.0, it was not just a catchphrase, but was a transformation blueprint to reshape the way we operate, compete and grow. We are focused on execution, as I hope you will realize as we move ahead in this update. If I had to oversimplify our strategy, and I mean oversimplify, it really comes down to getting three things right. Improving our CASA, especially the current account fees, to address our cost of funds. Driving better yield on advances, largely by re-shipping the asset mix. And increasing granularity and volume of our fee income. In the quarter gone by, there is clear evidence that our execution is in sync with all these three objectives. And we are making good progress on all three fronts in spite of systemic headwinds on a few aspects. There remains, of course, a lot more to do. Later on this call, Venkat will take you through these details when he discusses the quarterly results. Coming to the execution element, we began by refocusing our energies on the most vital part of the bank, our branches, people and profitability model. The Free the Branch initiative is now fully under way. We have already created 70 regional business support centers which are our GUB and AGRI hubs which are now fully functional. Helping free up frontline teams from all activities other than relationship and sourcing aspects. The establishment of regional loan service centers which will take care of the retail asset related work at branches is progressing smoothly and should be fully in place in the second quarter. We continue to focus on what we call code, C-O-D-E-S, centralize, outsource, digitize, eliminate, simplify. And several initiatives have already been put in place and more are in the pipeline to operationalize each of these. Our goal here is clear, remove friction from day-to-day work and allow branch teams to focus squarely on customer engagement and business development. This process will continue and gain even more momentum in the next two, three quarters. We are in the final stages of finalization of standardized branch formats and manning models in them. For CASA around opening, turnaround times have been improved by realigning staffing models and improvement in processes. However, task across products is an important area of focus for the future quarters as well. We are investing in capability breeding across all levels. Sales management training is underway for identified managers in partnership with a globally renowned sales training firm. A lower cost sales force structure has already been deployed in select branches and we will enhance the scope of this initiative as we get more comfortable with the outcomes. We have kicked off the process of identifying new branch locations based on data-backed inputs and we have commissioned an external agency to help us assess our network scientifically. We have already begun a process of reviewing our branch locations and performance to evaluate shifting and upgrading branches to improve their attachment and visibility. We are also working with a partner for redesigning our physical branch formats. This may mean slightly lower number of branches this year, but with a better foundational work, we can be surer of the way forward and also gather speed later. We have overhauled our performance scorecards for branches as well as individual officers, RMs, etc. Sharpening focus on CASA growth and profitability. A department level P&L framework going down to the branch level P&L has been rolled out and is now published frequently based on needs. Now the team can see the actual financial impact of their actions. We have also made the branch manager role more aspirational with a higher incentive structure, performance-linked metrics, and alignment to business priorities, and freeing them from a lot of routine. We want to ensure that the branch managers and our regional and zonal heads of all businesses function like being CEOs. That is the final goal. In some sense, we are refueling mid-air, re-engineering the business while we are still delivering the business numbers that we have delivered. Fee income and pricing reforms have kicked off with several important changes. We have revised our fee and charges in line with competition, energized our product partners and improved our revenue structures. Some of the impact of that is already visible in our fee growth for the last quarter. We have also implemented a new loan pricing and delegation structure, our RAROC-based Pricing models and transfer pricing models have been fully revamped, giving a sharper insight into segment-level profitability, product-level pricing decisions across the bank and customer-level pricing and profitability decisions in the corporate businesses. With this methodology, a more holistic customer-level approach to business with the right balance between wallet share and pricing and also the right mix between fund-based revenues and fee revenues is enabled. The wealth management and banka vertical is now well underway. With experienced hires onboarded, head of business, head of products and sales heads are all in place. Technology enablement is underway. Our partnerships are being renegotiated or researched to better align outcomes and ensure we build a scalable platform. We also made strong progress in strengthening our trade and correct capabilities. We also now have a head of global transaction banking who joined us last month. The central teams have been strengthened. A team of IRMs across the branch network, now called PRM business, Priority Relationship Managers business, have been identified and trained to give a push to the retail, trade and product business as well as current account business. Our retail assets team has been restructured to have separate heads for unsecured and secured businesses. Both are now headed by new talent that we acquired last quarter. Also within the secured business, separate verticals have been created for lap and home loan, auto as well as grand distribution of secured assets to bring sharper focus. A retail credit head would be soon joining our team under the Chief Credit Officer. In the corporate bank business, we have created a separate vertical focusing on B6 segment, which will also help us enhance our focus on capital markets and correspondent banking. This allows the rest of the corporate bank to focus more sharply on growing the mid-market corporate segment. Foundational work has been already done for traction and EMI-based business loans and Agri-based SME loans. These products will be rolled out in the coming quarters. Tech is, of course, the backbone of Federal 4.0. Our corporate and commercial trade underwriting automation has just gone live. On the customer side, FedOne, our unified interface for corporates, has gone live with a new collection and payment solution, thereby completing the phase one of rollout and will undergo monthly upgrades with few future additions from here on. Online trade is our next big project within this unified interface. FedMobile app has seen over 15 new features rolled out this quarter. The GenAI powered chatbot as an internal co-pilot for our employees is in alpha testing. It's being trained on our internal knowledge base. And this is just the first step in embedding AI into both customer and employee journeys. At the infrastructure level, we are engaging a partner to undertake a full review of our IT architecture and create a roadmap for the future. ensuring our digital and technology backbone in its future growth. We have strengthened the technology teams with three key new hires just below the CTO level. We have placed customer experience at the center of all this transformation. Our CRM platform revamp has already delivered over 15 key enhancements. We have kicked off a deep-dive study to improve adoption and usage of the platform, ensuring we are not just building tools, but driving value through better account management. lead management and organizing our process processes better. There is a lot more work to be done in this area to leverage the investment we have already made in this platform. This year, we have taken a bolder step in brand building. The Savings Key Vidya campaign featuring Vidya Balan is now live. It is now not just a celebrity endorsement, it's about repositioning the bank in the minds of retail savers. This is an integrated transformation with over 50 large and 100 small projects under execution designed to make federal banks faster, simpler, more profitable and more agile. Federal 4.0 is not just a plan anymore. We are transforming where it matters and we remain focused on doing it at speed. But this is surely a multi-quarter journey. This journey will come with some air pockets at times but we remain resolute in our execution. My team fully shares my excitement as we take this journey forward. Thank you for walking this journey with us. Now let me hand it over to Venkat for a more detailed walkthrough of the quarter in particular that went by. Incidentally, he recently got elevated to the board as executive director. Welcome Venkat and all of you.