Federal Bank: A Journey from Prominence to Dominance

Federal Bank, a leading private sector bank in India, has proudly announced a significant milestone, achieving a record annual net profit of Rs. 3,000 crores, a first in its history.

The bank’s journey since its inception in 1931 as Travancore Federal Bank has been marked by customer-centric innovation, prudent financial management, and robust growth. Today, Federal Bank stands as a dominant player in the banking industry, delivering consistent value to its stakeholders.

Profits at an All-Time High

This past fiscal year has seen Federal Bank register a series of highest-ever achievements. For the year ending March 31 2023, the lender reported its highest-ever quarterly operating profit at Rs. 1,335 crores, a substantial 67% year-on-year (YoY) growth. Net profit reached a record Rs. 903 crores, up 67% YoY, with net interest income (NII) witnessing a 25% YoY growth.

Federal Bank's credit growth momentum continues with overall credit growth of 20% compared with last year. The retail sector is up by 18% YoY, business banking by 13% YoY, corporate banking by 23% YoY and commercial credit by 18% YoY. The value created by the bank's group entities doubled, indicating strong internal growth and synergies.

The bank's total deposits grew by 17% YoY, with resident savings bank deposits growing by 8% YoY. Total other income stood at Rs. 734 crores, up 58% YoY, and the cost-to-income ratio improved to 49.51%, down by 10.29% YoY.

On the asset quality front, the bank maintained a gross non-performing assets (GNPA) ratio of 2.36% and a Net NPA ratio of 0.69%. The provision coverage ratio (PCR) went up by 83 basis points to 70.02% sequentially, with recoveries and upgrades worth Rs. 399 crores.

Growing Market Share

Federal Bank also made strides in expanding its market share and productivity in the financial year 2023 (FY2023). The lender's market share in advances increased to 1.28%, and in deposits, it grew to 1.14%. Business per employee and branch reached new highs, demonstrating efficiency and productivity.

Federal Bank has been at the forefront of several initiatives, with over 350,000 microfinance clients, 95% of whom are women. Bill Discounting on TReDS grew by 237% YoY. The lender also added 75 new outlets across the country in FY23 and plans to open 100 more in FY24. It has also partnered with UAE-based Mashreq Bank to launch an online facility for opening non-resident Indian (NRI) accounts.

Federal Bank's balance sheet grew by 18% YoY, crossing Rs 2.6 lakh crores. Total business crossed Rs. 3.87 lakh crores, growing by 19% YoY and 5% quarter-on-quarter (QoQ). The capital-to-risk (weighted) assets ratio (CRAR) stood at 14.81%, demonstrating the bank's financial resilience.

Looking Ahead

In FY2024, Federal Bank remains committed to its mission of delivering exceptional customer experiences, driving innovation, and contributing to the socioeconomic development of the communities it serves.

The lender's dominance in the Indian banking industry is evident from its strong financial position and its presence in every corner of the country. With a strong focus on customer satisfaction and innovation, it is no surprise that Federal Bank has risen to the top of the industry.