More Stories

Informist, Wednesday, Apr. 30, 2025

By Pratiksha

NEW DELHI – The microfinance loan segment requires continued caution and Federal Bank is approaching it prudently, senior management of the lender said in a post-earnings analyst conference call on Wednesday. "...the MFI (microfinance), which we will continue to be cautious for a couple of more quarters, or maybe at least one more quarter to see whether we can grow that," the management said.

The Kerala-based bank's microfinance loan book rose 19% on year to INR 41.10 billion, down 0.3% sequentially in the March quarter. The private bank's gross advances rose 13% on year to INR 242.77 billion, of which the microfinance segment held a 2% share.  

Earlier in the day, Federal Bank's Managing Director and Chief Executive Officer K.V.S. Manian said in a post-earnings press conference that stress in the microfinance portfolio is not expected to improve in the near future, adding that stress in the segment is likely to bottom out in the next two quarters.

In Jan-Mar, of the bank's total retail loan book of INR 692.68 billion, which was up 10% on year, the microfinance segment comprised of a 3% share. The top management said that while the lender's microfinance portfolio is small, slippage from the same is causing a jump in agriculture slippages. The bank recoginsed fresh agri slippages of INR 1.71 billion in Jan-Mar. 

Further, the lender expects to resume steady growth in the gold loan segment going ahead. The lender's gold loan book grew 21% on year but fell 3% on quarter to INR 305.05 billion. The bank also wants to focus on growing fixed-rate products like personal loans and commercial vehicle loans.  

"On personal loan, I think we have noticed that the slippages have come off and we are getting more comfortable in growing that segment going forward. And that is one area where we are about to start pushing for higher growth," it said. The lender also said that it will push for growth in the credit card segment, adding that there is more comfort on that front based on the underwriting standard . 

When asked about its gudance for net interest margin, the management said it was difficult to give the same currently. "I think our approach to this is like you have seen in the last quarter, remain agile, find options which will keep control on our NIM to the extent possible," it said. The bank's net interest margin for the March quarter was 3.12%, up 1 basis point from a quarter ago.

Federal Bank's net profit for Jan-Mar rose 13.7% on year to INR 10.30 billion on the back of a rise in interest income. Sequentially, the company's profit after tax rose 7.8%. On Wednesday, Federal Bank's shares closed 3.3% lower at INR 196.68 on the National Stock Exchange. The bank announced its earnings post market hours.  End

Edited by Akul Nishant Akhoury

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel  +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.