Federal Bank on Wednesday reported a 14% year-on-year increase in its net profit for the fourth quarter at ₹1,030 crore, driven by a growth in fees and other incomes and lower operating expenses.
Interest income of the Kochi-headquartered lender rose 11% to ₹6,648 crore while interest expenses increased 13% to ₹4,271 crore. The operating profit for the quarter stood at ₹1,465 crore, marking a 31% year-on-year increase.
Total business reached ₹5.18 lakh crore as of March 2025, registering a 12.24% year-on-year growth. Total deposits rose 12.32% to ₹2.53 lakh crore. On the assets side, net advances grew 12.14% to ₹2.35 lakh crore in the quarter under review.
Retail advances — including housing, auto, personal loans and credit cards — grew by 14.50% to ₹77,212.16 crore, while business banking advances rose 11.44% to ₹19,064.36 crore. Commercial banking grew 27% to ₹27,199 crore. Corporate advances registered an 8.39% growth to ₹79,773 crore. Commercial vehicles advances stood at ₹4,644 crore. Gold loans, including ADLG, registered a 21% growth to ₹30,505 crore.
“We are not seeing any clarity about improvement in the asset quality in the microfinance segment,” said Managing director and chief executive KVS Manian, during the Q4FY25 earnings call. “We are beginning to feel more comfortable on the personal unsecured side.”
Manian noted that the bank grew its commercial vehicle business during the quarter and intends to increase the share of used CVs and passenger cars in this segment. Federal Bank’s auto loans grew 17.8% year-on-year, while credit card loans grew 18.7%.
The net interest margin (NIM) stood at 3.12% during Q4FY25 and 3.13% for the full year. Cost of funds rose to 6.06% from 5.97% in Q4FY24. Manian attributed the increase to high deposit costs. “Deposit rates are now slowly coming down. It will take some more time for us to see the full impact of the rate cut on deposits,” he said. On asset-side pricing, Manian said the bank will focus on segments that ensure NIM protection along with profitable growth.
The asset quality turned out to be the best in a decade. Gross non-performing assets (NPA) as a percentage of gross advances declined to 1.84% from 2.13% a year ago. Net NPA also improved, falling to 0.44% from 0.60%. Fresh slippages for the quarter stood at ₹483 crore, primarily in the retail and agri segments.
Venkatraman Venkateswaran, group president and CFO, attributed the slippages to stress in the microfinance portfolio. “The stress in the MFI portfolio still continues and hasn’t bottomed out. We believe it will take probably a quarter or two more to see that bottom-out.”
For the full financial year, Federal Bank’s net profit crossed the ₹4,000-crore milestone at ₹4,052 crore. Shares of Federal Bank closed 4% lower at ₹196.15 on the NSE on Wednesday.