Federal Bank eyes Rs 2 lakh crore business in 3 years

MUMBAI: Kerala-based Federal Bank, which closed 2012-13 fiscal crossing the Rs 1 lakh crore mark in assets and liabilities base for the first time, today said it has set a target of doubling the total business in the next three to three-and-a-half years.

"We have crossed the landmark with our total business crossing the Rs 1-trillion (Rs 1 lakh crore) mark as of March 31. Our target is to make this cross the Rs 2-trillion mark in the next 36-42 months," 
Federal BankBSE 1.03 % Managing Director and Chief ExecutiveShyam Srinivasan said.

He said that when he took over the mantle of the bank in September 2010, he had set a target for himself to double the asset and liabilities base every three years or so.

However, Srinivasan was quick to add that he doesn't want to run the bank on lending or deposit raising spree. "I don't believe in breakneck growth which is not healthy. But I am cautiously optimistic that if we are able to maintain the current run rate, we can make it on a healthy manner."

As of March-end, the bank had a deposit base of over Rs 57,600 crore, while its advances stood at over Rs 44,200 crore, Srinivasan said.

The Q4 saw exceptional growth coming in from across the sectors, on the back of an over 18 per cent growth in Q3, he said, adding he expects the new fiscal to maintain the good growth momentum in Q4. The bank also closed the year with 1,100 branches and 1,170 ATMs, he said, adding that the branch expansion target is 10-12 per cent per annum.

"But our target is that business should log in double the growth rate of branch additions," he said.
The bank clocked a CAGR of 25 per cent since September 2010, when the bank's assets and liabilities stood at Rs 63,000 crore. Srinivasan refused to talk about the pressure on margins or margin target for the Q4, citing mandatory silence period. He said NRI deposits, which constitute 21 per cent of total deposits of the bank, have risen over 35 per cent since RBI liberalised rates in this category in December 2011. 

On rate cuts, he said, the bank has already reduced its base rate twice -- to the tune of 55 bps - and is currently one of the lowest at 10.20 per cent. 

In the October-December quarter, the bank reported a moderate 4.4 per cent growth in net profit at Rs 211 crore, despite a full 48 per cent jump in other income and a decline in provisioning and tax outgoes, as the bank went on a branch expansion drive in the quarter. By the December quarter, total business reached Rs 91,101.34 crore, showing a rise of 13.95 per cent on a y-o-y basis. 

Net interest margin for the quarter stood at a healthy 3.47 per cent, while the net NPAs stood at 0.92 per cent. The gross NPAs slid a tad to 3.85 per cent from 3.97 per cent during the quarter. Total provisions stood at 74.53 per cent at the end of the third quarter. 

Net advances grew 18.94 per cent to Rs 39,494 crore from Rs 33,206 crore, driven by SME and retail loans with the retail loan book growing 23.6 per cent to Rs 12,201 crore from Rs 9,870 crore. 

Deposits rose 10.41 per cent, from Rs 46,742.46 crore to Rs 51,607.31 crore with NRI deposits clocking an increase of 34.98 per cent to Rs 14,234.82 crore and retail deposits growing 17.55 per cent to touch Rs 45,467.87 crore.