Federal Bank is avoiding aggressive pursuit of high-yield, high-risk assets to counter declining yields, which have dropped from 9.5 percent to 9.1 percent, according to KVS Manian, MD and CEO of the company.
“Currently it is not the environment to really, we do have a microfinance business, but this is not the environment where we want to press the pedal on the very high yielding products,” he said.
He also said the bank remains in a “wait and watch” mode on microfinance segment due to ongoing challenges.
“We are seeing the stress in the MFI portfolio still continue and it has not bottomed out. And we believe it will take probably a quarter or two more to see that bottom out,” Manian stated.
However, he said, recovery is evident in other areas.
The bank's high-yield credit card product is gaining traction, he said, adding that the bank plans to boost the personal loan segment, which has been dormant this year but is now poised for growth due to an improving credit environment.
He added, “We see opportunities to expand our personal loan business, which we didn’t grow last year. This year, we expect to scale it up significantly compared to last year, and we’re growing more confident in our unsecured personal lending.”
On deposits, Manian said he is confident in its franchise.
“We have a reasonably strong franchise on the savings account and customer acquisition side and we do not believe that we need to really play an aggressive savings rate game at this point in time,” he said, highlighting recent cuts to savings and term deposit rates in April to manage margins amid anticipated repo rate reductions.
Federal Bank on April 30 reported a net profit of Rs 1,030 crore in Q4F Y25, up by 14 percent year-on-year from Rs 906 crore in Q4 FY24.
The bank said its net interest income (NII) surged 8 percent to Rs 2,377 crore in the quarter under review compared to Rs 2,195 crore in the year-ago quarter.
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