Federal Bank expects a 5-6 basis points improvement in net interest margin (NIM) and has reiterated its guidance following its Q2 earnings call. The bank said it does not expect much impact on its NIM trajectory from foreign currency non-resident (FCNR) deposits.
The bank is evaluating opportunities to raise funds through external commercial borrowings (ECB) and overseas foreign currency borrowings (OFCB), with the window open until the end of December. It also has an active $500 million medium-term note (MTN) programme in readiness and will access the market if the economics are favourable.
Federal Bank said it is focusing on medium-yielding assets, including gold loans, cards, loans against property (LAP) and commercial vehicles, to drive growth.
On asset quality, the bank said fresh additions to gross non-performing assets (NPAs) were not concentrated in any particular area and that overall asset quality had held up well. It also reported almost no slippages in the corporate and commercial segments.
The bank said it was continuously exploring opportunities in financial services, including core banking and universal banking, but had nothing to report at present.
Its agriculture business has been kept on a low-key growth trajectory. The bank said it had not seen any specific impact on its portfolio from drought conditions or state-level announcements and had nothing further to flag on the portfolio at this stage.
Federal Bank is also assessing the potential impact of the Insurance Regulatory and Development Authority of India’s (IRDAI) draft on commissions on its associate company. The assessment is at an early stage.
On the possibility of acquiring Jana Small Finance Bank, Federal Bank said it evaluates all opportunities and would disclose details when there is something to report.
Also Read: Federal Bank Q2 Results: Stock gains after stable slippages, margins expand