Federal Bank shares gain as it acquires 4% additional stake in Ageas Federal Life

So far this year, the private lender's stock has dipped 3 percent

Shares of Federal Bank gained to Rs 196 apiece on March 26 after the company inked a binding memorandum of understanding (MoU) with Ageas Insurance International NV and Ageas Federal Life Insurance Company (AFLIC) to acquire a 4 percent equity stake in AFLIC for Rs 97.44 crore.

So far this year, the private lender's stock has dipped 3 percent, underperforming the Nifty 50, which has slipped just 0.3 percent.

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This acquisition will boost Federal Bank’s stake in AFLIC from 26 percent to 30 percent. The deal entails purchasing 3.2 crore shares at Rs 30.45 per share and is subject to regulatory approvals from the Reserve Bank of India (RBI) and the Insurance Regulatory and Development Authority of India (IRDAI). The transaction is expected to be finalised on or before October 31, 2025.

AFLIC, a joint venture between Ageas Insurance International NV and Federal Bank, reported a net worth of Rs 1,176 crore, assets under management of Rs 17,455 crore, and a net profit of Rs 107 crore in FY24.

In the third quarter, Federal Bank posted a net profit of Rs 955.4 crore, reflecting a 5 percent year-on-year decline from Rs 1,006.7 crore. However, net interest income (NII) climbed 14.5 percent year-on-year to a record high of Rs 2,431.3 crore.

Last month, KVS Manian, the bank's newly appointed Managing Director (MD) and CEO—previously the joint managing director of Kotak Mahindra Bank—outlined his vision to propel Federal Bank from its current No 9 position to the No 5 spot within three years. This growth strategy will be driven through both organic and inorganic expansions.

The bank’s management has set a target to increase its CASA mix to 36 percent by FY28. To support this goal, Federal Bank plans to expand its footprint by opening 400-450 new branches by FY28, with a strategic focus on high-growth states such as Karnataka, Tamil Nadu, Maharashtra, and Gujarat.

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