More Stories

Informist, Saturday, Oct. 18, 2025

MUMBAI/NEW DELHI – Federal Bank expects credit growth of 10-12% in second half of the current financial year 2025-26 (Apr-Mar), the bank's management said in a post-earnings media call Saturday. In the September quarter, the bank's advances grew 6% on year to INR 2.56 billion. "We normally try to benchmark ourselves against the nominal GDP and we expect to grow around 1.2 times of that. Currently, nominal GDP with the low inflation is in single digits. So, I would say between 10% to 12% would be the credit growth for H2 (Oct-Mar)," the management said.

"We continue to remain cautious on MFI (microfinance) and personal loans and are not pushing for growth," the management said. "We need to grow in our chosen segments and the growth must be profitable. These are very important for us, and we are seeing opportunities to grow at a reasonable clip and still remain profitable." Of total advances, personal advances fell 7% on year to INR 36.58 billion while micro advances declined 2% on year to INR 40.23 billion.

The private sector bank's net profit fell nearly 10% from a year earlier to INR 9.55 billion. However, the net profit was higher than INR 8.62 billion for the June quarter. On Friday, shares of the bank ended at INR 212.38 on the National Stock Exchange, down 1%.

The management said credit growth of the bank currently appears weak but it expects it to improve as demand picks up, driven by cut in Goods and Services Tax. The bank is well-positioned to capture potential corporate credit opportunities, the management said. Federal Bank's management emphasised growth focus on medium-sized corporate segments, subject to demand pickup.

"We are hoping that there will be some automatic traction on the corporate credit side, which we are quite well-placed to capture if it were to happen," the management said. According to the management, the ongoing GST 2.0 reforms are helping simplify compliance and boost consumption, especially for micro, small and medium enterprises and rural markets.

The GST Council on Sept. 3 overhauled the indirect tax regime by collapsing the four-slab GST structure of 5%, 12%, 18%, and 28% to a two-slab structure of 5% and 18%. All new rates, except for those on tobacco products, took effect from Sept. 22.

The management remains optimistic about growth in gold loan portfolio, driven by increased gold prices and efforts to increase awareness among borrowers about formal credit options. Medium-yield segments, including commercial banking and commercial vehicles, are already showing fast growth, the management said.

The management expects asset quality to improve going ahead. The bank's slippages fell to INR 5.79 billion in the September quarter from INR 6.58 billion. The bank's gross non-performing asset ratio as on Sept. 30 was 1.83%, against 1.91% a quarter ago. The net non-performing asset ratio was unchanged from a quarter ago at 0.48%. The bank's slippage ratio at the end of the September quarter was 0.94%, down from 1.11% a quarter ago but up from 0.84% a year ago.

Reported by Vaishali Tyagi and Pratiksha

Edited by Ashish Shirke

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 (22) 6985-4000 

Send comments to feedback@informistmedia.com

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