Q3 2025 Federal Bank Ltd Earnings Call Transcript
Key Points
- The Federal Bank Ltd (BOM:500469) has implemented a strategic reorientation focused on improving the quality of its liability base, with a shift towards average CASA as a key metric, resulting in a 2.3% growth in average CASA this quarter.
- The bank has successfully transitioned its auto loan portfolio from a floating rate model to a fixed rate model, which is expected to improve medium-term net interest margins (NIM).
- Commercial Banking and Business Banking segments have shown strong growth, with Commercial Banking growing 5.65% quarter on quarter and 24.5% year on year.
- The bank's liquidity coverage ratio (LCR) has improved significantly from 111% to 133%, reflecting a more stable and sustainable liability base.
- Despite strategic changes, the bank has maintained its net interest margin (NIM) even with a marginal increase in the cost of deposits, indicating effective margin management.
- The Federal Bank Ltd (BOM:500469) experienced a marginal drop in total deposits from INR2 lakh 66,553 crore to INR2 lakh 64,829 crore, primarily due to strategic reorientation.
- There has been a decline in end-of-period CASA, particularly in current accounts, contributing to a reduction of nearly INR1,100 crore.
- The bank has faced regulatory headwinds in its gold loan segment, which may slightly impact growth in the near future.
- The microfinance portfolio remains an area of cautious navigation due to potential risks, impacting the bank's ability to expand in this segment.
- The bank has taken an accelerated provision of INR292 crore, impacting profitability, although it is part of a broader effort to maintain a clean and focused balance sheet.
Ladies and gentlemen, good morning, and welcome to the Q3 FY25 earnings conference call of the Federal Bank Limited. (Operator Instructions) Please note that this conference is being recorded.
I now hand the conference over to Mr. Souvik Roy, Head of Investor Relations of the Federal Bank Limited. Thank you, and over to you, sir.
Thank you, and good morning, everyone. Thank you for joining us on this early call today. We truly appreciate your flexibility in accommodating this one-off schedule change, and we are hopeful to return to our regular timelines moving forward.
Most of you know, we have scheduled our analyst meet on February 21, at Titan BKC, which was announced on the exchanges a while ago. Given the limited seating capacity, we encourage you to register the earliest. Registration will certainly close by January 30, and confirmations will follow in early February. At analyst meet, we will discuss our strategic road map in greater details. But for today, let's focus on the quarter that
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