A leading private sector bank, renowned for its strong retail presence in South India, reported mixed financial results for the latest quarter. While experiencing a decline in net profit and stock performance, the bank showed resilience with improved net interest income and asset quality, as reflected in the reducing NPA levels.
Share Price Movement
The share price of Federal Bank Limited went down 6.8 percent to Rs. 178.09 per share on Tuesday, a decrease from its previous close of Rs. 191.14 per share. The market capitalisation now stands at approximately Rs. 44,506 crore as of January 28, 2025.
Q3 Financial Highlights
Federal Bank’s Q3FY25 net profit dropped 5 percent year-on-year to Rs. 955.4 crore, compared to Rs. 1,006.7 crore last year. However, net interest income increased 14.5 percent to a record Rs. 2,431.3 crore.
The bank’s asset quality improved, with gross NPAs reducing by 6.8 percent to Rs. 4,553.3 crore from Rs. 4,884.5 crore in the previous quarter. Net NPAs also declined by 14.5 percent to Rs. 1,131.2 crore from Rs. 1,322.9 crore quarter-on-quarter.
Provisions rose sharply to Rs. 292.33 crore in Q3 FY25, compared to Rs. 158.35 crore in Q2 FY25 and Rs. 91.22 crore in Q3 FY24. The provision coverage ratio stood at 74.21 percent.
The Federal Bank reported strong year-on-year growth, with total deposits increasing by 11 percent and net advances rising by 16 percent, reflecting strong business momentum.
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Competitors
Federal Bank competes with leading Indian banks like HDFC Bank, ICICI Bank, Kotak Mahindra Bank, and SBI.
Federal Bank has a P/E of 11.23, which is a bit higher than industry P/E of 10.75.
Market Outlook
India’s banking industry is flourishing, fuelled by economic growth, digital payments, and financial inclusion. Key trends include UPI expansion, rural credit digitisation, and fintech innovations. With initiatives like CBDC pilots and WhatsApp banking, the sector is modernising swiftly. By 2025, India’s fintech market is projected to hit $150 billion, securing its spot as the third-largest global fintech ecosystem. These advancements are expanding access to credit and financial services, driving sustained economic growth.
Written By Fazal Ul Vahab C H
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