Federal Bank Demonstrates Robust Growth in Q1 with 21% Surge in Total Advances and Gross Advances
Federal Bank has demonstrated a strong business performance in the first quarter of the financial year 2023-24, as revealed in a regulatory filing. The bank witnessed a remarkable 21% increase in both total deposits and gross advances. The total deposits reached Rs 2,22,513 crore by the end of the quarter, a significant rise from Rs 1,83,355 crore in the corresponding quarter of the previous year. Similarly, the gross advances surged to Rs 1,86,593 crore, compared to Rs 1,54,392 crore in the same quarter last year.
These robust figures indicate the bank’s successful efforts in attracting deposits and expanding its lending portfolio. The strong growth in total deposits reflects the trust and confidence of customers in the bank, while the significant rise in gross advances showcases the bank’s ability to meet the credit needs of its customers.
Federal Bank’s solid performance in the first quarter sets a positive tone for the financial year 2023-24 and highlights its consistent focus on growth and profitability. With these positive results, the bank is well-positioned to capitalize on further opportunities and continue delivering value to its stakeholders.
The Bank’s customer deposits, which exclude interbank deposits and certificates of deposit, reached a total of Rs 2,10,439 crore, reflecting a significant 17% increase from Rs 1,79,586 crore as of June 30, 2022. This growth in customer deposits demonstrates the bank’s ability to attract and retain funds from its customer base.
Additionally, the bank reported a notable increase in certificates of deposit during the first quarter, amounting to Rs 9,179 crore, marking a substantial surge of 237%. Similarly, interbank deposits also experienced a significant rise, reaching Rs 2,895 crore, showing a remarkable increase of 177%.
These figures highlight the bank’s successful efforts in expanding its deposit base, including certificates of deposit and interbank deposits. The substantial growth in these categories indicates increased confidence from both customers and interbank entities in the bank’s stability and reliability.
The bank’s strong performance in customer deposits, certificates of deposit, and interbank deposits positions it favorably for future growth and showcases its ability to attract and manage diverse sources of funding.
According to the regulatory filing, Federal Bank reported that its retail credit book witnessed a growth of 20.2%, while the wholesale credit book grew by 21.6%. The bank maintained a retail-to-wholesale ratio of 54:46, indicating a balanced distribution of credit between retail and wholesale segments.
Furthermore, in terms of sequential growth, the Bank’s loans expanded by 5.2% in the first quarter of FY24 compared to the previous quarter ended in March 2023. This demonstrates the bank’s steady growth in its lending activities during the said period.
The strong growth in both retail and wholesale credit books reflects the bank’s ability to cater to the diverse financing needs of individual customers as well as corporate clients. The balanced retail-to-wholesale ratio indicates the bank’s prudent approach to managing its loan portfolio.
Overall, bank’s positive loan growth and well-maintained retail-to wholesale ratio position it well for sustained growth and profitability in the future.
In the quarter that ended June 2023, Federal Bank reported a CASA ratio of 31.85%, which represents the proportion of deposits in current accounts and savings accounts to the total deposits. This ratio decreased compared to the previous year’s ratio of 36.84% and the preceding quarter’s ratio of 32.68%.
Additionally, the bank’s CASA deposits, referring to the deposits in current accounts and savings accounts, experienced a 5% increase. The CASA deposits rose to Rs 70,872 crore from Rs 67,540 crore in the corresponding period of the previous year.
The decline in the CASA ratio suggests a relatively smaller share of current and savings account deposits than the total deposits during the quarter. However, the absolute CASA deposits showed growth, indicating an increase in the number of funds held in current and savings accounts.
Overall, while the CASA ratio witnessed a decline, the growth in CASA deposits indicates that Federal Bank continues to attract and retain funds in its current and savings accounts, which are considered stable sources of deposits.
Thw Bank recently disclosed that the Reserve Bank of India (RBI) has granted approval for the appointment of AP Hota as the part-time chairman of the private sector bank. This announcement comes shortly after the bank’s decision to appoint AP Hota to the esteemed position.
The approval from the RBI indicates that the regulatory authority has reviewed and sanctioned the appointment, signifying its endorsement of AP Hota’s suitability for the role. As the part-time chairman, AP Hota will play a crucial role in guiding and overseeing the bank’s operations and strategic decisions.
The appointment of AP Hota reflects the Bank’s commitment to maintaining strong corporate governance practices and ensuring experienced leadership at the highest level. With the RBI’s approval, the bank can move forward with confidence in its leadership structure and continue its focus on growth and development in the banking sector.
