Federal Bank Q3 Results Review - Improving Visibility On RoA Sustaining In FY23/24E: ICICI Securities

Strong traction in earnings continued with Federal delivering multi-quarter high RoA of 1.3%.

<div class="paragraphs"><p>Federal Bank, Vashi branch in Maharashtra. (Photo: VIjay Sartape/Source: BQ Prime) &nbsp;</p></div>
Federal Bank, Vashi branch in Maharashtra. (Photo: VIjay Sartape/Source: BQ Prime)  

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ICICI Securities Report

Multi-quarter high return on asset /return on equity at 1.3% / 16% despite Rs 0.5 billion additional provision towards SR portfolio, sharp net interest margin expansion by more than 15 bps QoQ, steady decline in net stressed asset portfolio to 1.8% summarise Federal Bank Ltd.’s strong financial performance during Q3 FY23.

This is an outcome of the management’s successful execution of its new business strategy revolving around scaling up of high margin products like commercial vehicle /construction equipment, micro finance institution, micro, small and medium enterprise and credit cards (put together contributes 21% of total loans), focus on profitable growth and derivation of synergies from fintech partnerships.

Launch of digital personal loan with Paisa Bazzar for new-to-bank customers and cross-sell of personal loans on Fi platform are steps taken in the right direction to reap benefits from fintech partnerships.

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ICICI Securities Federal Q3FY23 Results.pdf

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