Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
The Federal Bank Limited (NSE: FEDERALBNK) Q4 2026 Earnings Call dated Apr. 29, 2026
Corporate Participants:
Souvik Roy — Head of Investor Relations
Krishnan Subramanian Manian — Managing Director and Chief Executive Officer
Venkatraman Venkateswaran — Executive Director and Chief Financial Officer
Analysts:
M. B. Mahesh — Analyst
Rikin Shah — Analyst
Akshay Jain — Analyst
Piran Engineer — Analyst
Kunal Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q4FY26 conference call hosted by Federal Bank. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sumik Roy, Head Investor Relations, the Federal Bank Limited.
Thank you. And over to you sir.
Souvik Roy — Head of Investor Relations
Thank you so much. Good evening and a very warm welcome to everyone on the call. Thank you for taking time to join us today and for your continued engagement with the Bank. We definitely value these interactions and look forward to sharing our annual performance as well. And along with of course our outlook for the year we share with the opening remarks from our MD and our ED will walk you through the key highlights of the year and with the strategic priorities going forward. This will be of course followed by a detailed Q and A like we always do with that.
Over to you sir.
Krishnan Subramanian Manian — Managing Director and Chief Executive Officer
Thank you Joey. Good afternoon everyone. Before Venkat takes you through the detailed financial performance for the quarter, I would like to share a few reflections as we close out the last year. This marks my first full financial year as MD and CEO of the bank. Over the past 18 months period our efforts have been directed towards sharpening, execution, strengthening our core and aligning the organization firmly with our long term strategic priorities that we had shared in the analyst meeting last year.
Our Q4 performance reflects a strong operational quarter with outcomes that are consistent with the direction we have articulated throughout the year. The progress we are seeing is not incidental. It is a result of deliberate actions taken across both sides of the balance sheet. We have had a record quarter on several metrics that details of which Venkat will cover later. On the liabilities front, we have undertaken a calibrated restructuring of our deposit profile. Our focus has been on improving the quality and granularity of deposits with a clear pivot toward retail liabilities.
We hit a milestone of over 1 lakh crore in CASA. Our sharp focus on CASA and specifically CAA is is clearly showing results. As a result of this approach, we have consciously reduced our reliance on high value deposits which has contributed to a more stable and cost efficient funding base. At the same time, we continue to build on our traditional strengths. Our NRI franchise remains a key differentiator and we have further strengthened our leadership position. In this segment, NRI deposits have now crossed 1 lakh crore alongside a continued increase in market share reinforcing the strength and resilience of this franchise.
On the asset side, we remain committed to a calibrated shift in our portfolio mix. This is inherently a medium term journey and we are encouraged by the traction seen across most of our identified focus segments. Growth has been broad based and aligned with our objective of improving risk adjusted returns in a market where we have seen intense and sometimes irrational rate competition. Our fee income trajectory during the year has been extremely encouraging reflecting improved cross sell, better product penetration and a more diversified revenue profile.
Profitability metrics have also shown resilience. Our ROA has now reverted back to the pre rate cut levels supported by improved margins and disciplined cost management. During the quarter we also launched our wealth management business. This is an important step in building a stronger mass affluent franchise as well as deepening customer engagement, enhancing our fee pool and building a more comprehensive financial services proposition for our in parallel we have taken a more scientific and data driven approach to our physical network strategy.
Our branch expansion and restructuring initiatives are now guided by detailed studies undertaken by us along with reputed experts in the domain. This is helping us build a more efficient, well distributed and future ready branch network. In line with our recent brand refresh, our branches have begun transitioning to to a renewed and refreshed outlook. The project on reimagining our branch operating model is also making very good progress. As we look ahead our focus remains unchanged, consistent execution, disciplined growth and continued strengthening of the franchise.
With that I will hand it over to Venkat to take you through the numbers in more detail.
Venkatraman Venkateswaran — Executive Director and Chief Financial Officer
Thank you Manian and good evening to all of you. Before I give my comments let me start by congratulating my colleague Manikantan for becoming the CFO of the bank and I welcome him to this key position in the bank and wishing you all the very best. Mani.
M. B. Mahesh — Analyst
Thank you.
Venkatraman Venkateswaran — Executive Director and Chief Financial Officer
Thank you all for joining us today. I trust you have had a chance to review our investor presentation and disclosure. I will focus on the key financial and balance sheet development from the final quarter but before that a few comments on the macro environment. The Q4 macro landscape remained largely resilient with growth momentum strong and inflation within the RBI’s 2 to 6% tolerance back headline CPI averaged approximately 3.1% for the quarter. The core inflation narrative remains constructive and core CPI averaged around 2.1% for the quarter reflecting continued supply side efficiency and absence of broad demand side pressure.
Food inflation was contained early in the quarter but picked up towards march reaching 3.87% and this is a trend which we have to monitor going into Q1FY27. On the policy side RBI held a repo rates at 5.25% following 125 basis points of easing through calendar 2025. The principal macro risk to flag is obviously the West Asia conflict which escalated late in the quarter 28 February and introduced volatility into global energy markets. The full inflationary pass through is expected to reflect from Q1 from later part of Q1FY27.
That said, India’s macro fundamentals remain on strong footing. The operating environment while carrying new uncertainties into FY27 remains fundamentally sound. Our focus on high quality credit and balance sheet discipline has kept us well buffered against external uncertainty. The deliberate shift in our portfolio towards secured and granular assets over the past few years has positioned us well. Now coming to the performance for the final quarter it was a quarter of robust execution. Let me call out that the numbers I’m going to are on the underlying performance metrics which will be detailing our core earnings trajectory excluding impact of one off gains you would have seen in the tech.
We have called out some one off gains and the impact of that. We delivered 1,145 crore in net profit representing nearly 10% sequential growth. This is the highest ever quarterly net profit for the bank. The performance was driven by healthy NII fee income and disciplined cost management and tight monitoring of our asset quality. As we have emphasized before, these outcomes are the result of deliberate shift in our balance sheet towards a more granular and durable profile. The total business as of 31st March stood at 5.78,959 crores growing at 4.63% CoQ and nearly 12% YoY.
Our liability franchise remains the bedrock of our stability. CASA balances cross the 1 lakh crore mark to close at 1.3390 crore growing 8.26% sequentially and nearly 21% YoY. Our NRV deposit which is our most reached a significant milestone crossing the 1 lakh crore mark to close at 12620 crore. This represents a robust 13.2% YoY increase underscoring the deepening trust and strong engagement. Our CASA ratio improved to 32.94% an increase of 87bps QoQ and 271 basis points IO y. This is amongst one of the best in the industry.
The steady improvement in our funding mix is materially enhancing our durability. With the cost of deposits declining 5 basis points QoQ to 5.43% on advances. Our gross advances closed at 2.68369 crores up 3.65% sequentially and nearly 13% y o wide growth continues to be led by the segment we have consciously prioritized superior risk adjusted return. Commercial banking grew nearly 6% QoQ and 26% YoY, maintaining its position as a primary growth engine. Agriculture, agri and micro finance both saw healthy traction growing 5% and 7.28% QoQ respectively.
Our CVCE business saw a sharp uptick of 8.5% sequentially. Our gold loan portfolio delivered a robust performance once again growing 26% YoY and 1.9percent QoQ. This momentum in gold loan growth has been maintained despite the fact that we were downsizing the book of a specific subsegment to ensure full alignment with the latest regulatory framework. Our lab portfolio extended by 8% QoQ reflecting strong underlying demand and our focused approach. We expect this growth trajectory to further accelerate in the coming quarter as we continue to deepen our penetration in this high conviction segment.
In the business banking we saw a growth of 6% YoY. This was a conscious decision to prioritize portfolio health and yield protection. While our commitment to the MSME sector remains steadfast, our focus is on calibrated growth. Our corporate and institutional banking book remained essentially flat QOQ reflecting a deliberate shift towards credit selectivity amid global geopolitical noise and evolving trade dynamics. We have prioritized portfolio quality and pricing discipline over headline volume with exposures within high rated counterparties.
We are preserving capital and reinforcing the long term resilience of our wholesale balance sheet now coming to margins and core income. NIM for the quarter was 2716.66 crores growing 2.4% QoQ and 14.2% YoY. NIM expanded to 3.20% up 2 basis sequentially. This was supported by a further reduction in funding costs within the overall cost of funds declining 4 basis points to 5.46%. The other major callout is on the fee income which is again a record best ever stood at 990.92 crore, a strong growth of 10.5% QoQ and 24% YoY.
Total other income reached 1,145 crore. Fee growth remains well distributed and continues to strengthen the quality of earnings. Our cost to income ratio improved to 52.86% down 106 basis points sequentially which reflects the operating leverage within the franchise. During the quarter we expanded our physical presence by adding 39 new branches, staying consistent with our calibrator and like Manian mentioned data driven approach to network expansion. Our asset quality metrics continue to remain strong with GNPA and NNPA both at decadal best.
GNPA declined to 1.62% and NNPA down to 0.37 down 5 basis points qoq marking another all time low for the bank. A provision coverage ratio excluding technical write offs increased to 76.55% up 141 bps. Sequentially. Credit cost for the quarter was maintained at 47.4747 bids reflecting our high standards of underwriting and portfolio policy. As Maninya mentioned earlier, both ROA and NIMS have reached the pre rate cut levels. ROA increased to 1.24% up 9 basis points sequentially. If you recollect Q1 it was 1% ROE and we have ended the year at 1.24.
ROE improved to 12.47% and expansion of 79 basis point Q of Q To conclude, Q4 reinforces the fact that we are building a more stable margin led and resilient franchise. Our priorities remain unchanged, strengthening the liability franchise, growing in chosen segments and maintaining a tight grip on credit quality and cost. While global uncertainties, including the situation in West Asia, require us to remain watchful, the granular and secure nature of our balance sheet ensures we are well positioned across cycles.
We move into the new fiscal year with a focus on risk adjusted profitability and consistency of outcomes. Thank you and we’ll now open up for questions.
Operator
Thank you very much. We will now begin the question and answer session.
Questions and Answers:
Souvik Roy
Operator, before we start, just a small request from our end to all participants if you can please keep your questions to a maximum of two and refrain from repeating points that have already been covered. That will help us ensure that we can take questions from everyone on the call. Thank you. Please go ahead.
Operator
Certainly sir. Thank you very much. Ladies and gentlemen, if you wish to ask questions, you may press star n1 on your touch tone telephone. If you wish to remove yourself from the question queue, you may press star N2. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Ricken Shah from IIFL Capital. Please go ahead.
Rikin Shah
Hi, good evening and thanks for the opportunity. Maninsha, first of all, compliments on continued traction in your CASA and fee execution for the last few quarters I had a few questions but maybe I’ll come back later with more questions. So I restrict myself to two first, given the balance sheet realignment that you were doing this year, both your loan and deposit growth has been below system in FY26. Now once this realignment which seems to be largely done, could you comment on the growth outlook going ahead?
So that’s the first question. Second one is on staff expenses which declined about 9% sequentially. I’m presuming that is due to lower retireal provisions in this quarter. If you could quantify the same so that we can understand the normalized trends. And lastly, just a clarification 1. You know the one time provisions of 456 crore are included in PCR. Why not in contingent provisions? Why are they included in the provision coverage? So those are my three questions.
Krishnan Subramanian Manian
Okay, answering your first one Ricken, if you look at our deposit growth, I think it is important to go below the surface. If you look at the surface the deposit growth seems lower than the system. But if you just go one level down and look at our ASSA growth it is significantly more significantly more than the system in terms of growth rate. Even our retail term deposit growth is higher than the system. And what has actually we have grown our wholesale deposits negatively during the year and that is a measure of strength rather than weakness is the way we read the situation.
Because as you know the wholesale deposit rates were fairly elevated during especially during the last quarter and in the last two quarters actually. So the fact that we could fund our balance sheet with low cost liabilities and retail term deposit is a measure of strength and not weakness. And we think we have also resorted to very low borrowings during the year. So therefore we have a lot of gunpowder and free to fund growth going forward. So we feel fairly confident on the liabilities even on the asset side.
Again, I would request you to go one level deeper than just looking at the broad headline number because if you take all the media leading areas that we have chosen and we have stated that we want to grow have all grown extremely handsomely. Whether it is gold at nine or lap at eight or all of them actually each of them has grown extremely handsomely. So we feel fairly confident and remain focused on growing these segments because it is important for us to be focused on profitable growth and there is enough opportunity in building growth on that basis.
And we think we get increased traction going from here, not lesser traction. That’s about the growth question
Rikin Shah
For FY27. If you can I mean, fair points, the points that you clarified are well taken. But if you could offer any guidance on FY27 that would be helpful on growth.
Krishnan Subramanian Manian
So Ricky, all I would tell you is that we have clearly seen accelerating acceleration in all the areas we have chosen. And we’ll continue to, you know, build this acceleration and it will get better. If you recall, last quarter, YOY looked 8. Today it is looking 13. Right. So obviously there is traction building up and we are confident of building traction further from here. Let me leave the guidance at that.
Rikin Shah
Okay, sure.
Krishnan Subramanian Manian
The second question you asked was about the staff cost. We don’t want to quantify that because there are provisions that happen through the year and things like that. Those are not easily quantifiable to what exact impact that has had. But all I would say is that this is normal course of business. It happens during cycles. There are gains and negatives. We treat them as bae. So that is on the second, on the third, on the provision.
Venkatraman Venkateswaran
On the provisions, the conditions remain the same for withdrawal. Both floating npms, floating standard. First, let me make it very clear. We don’t have any particular portfolio where we want to provide this for. There’s no concern. So first thing I want to make it very clear is there’s nothing which we have specific to offset this. Again, having said that, the fact that it’s a one time game, we wanted to be conservative and create a buffer. And this we believe we can, as per the draft guidelines, we can use it during the ECL transition, which is around the cost.
Rikin Shah
Got it, sir. Thank you.
Operator
Thank you. Our next question comes from the line of Akshay Jain from Autonomous. Please go ahead. So, thank you sir. Thank you for the opportunity.
Akshay Jain
So
Operator
My question
Akshay Jain
Is again on growth. So how does the war
Krishnan Subramanian Manian
Change the outlook on growth? Like you had indicated that, you know, the war led to
Akshay Jain
Increased remittances during the early days. But now since things have settled, how is the remittance strength versus historical rates
Krishnan Subramanian Manian
And
Akshay Jain
You know, will it warrant a relook at growth assumptions on both deposit and loan side? So that’s my first question on growth and number one, margin behind us. So how should we look at margins? So is there any further deposit repricing left or is it more or less done? Those are my two questions.
Krishnan Subramanian Manian
Right. Answering your second one first, Akshay. There is still scope for deposit repricing as we have earlier also guided that our deposit pricing goes into next, I mean the first quarter of this year as well as maybe early part of the next second quarter as well. So there is some, still some deposit repricing potential that is possible from here where we stand. So so and of course but our NIM expansion as you can see from our numbers is not only a deposit repricing story, it is a mixed story on the liability side on casa it is on repricing of deposit, it is on reprice mix, on term deposits, retail versus wholesale it is a mixed story on the asset side, medium yield assets versus low yield assets.
So it is a composite complex story. It is not a one trick pony. So there are multiple levers. We still have to work on expansion of NIM from here. If you really look at our NIMS of last year versus this year full year. If you just take the last full year Nim versus this full year Nim, you will notice that we have just lost about 2 basis points in our NIM over the entire year basis. That’s probably one of the lowest in the sector. There are very few banks which have been able to defend their NIM as well as that.
So our NIM story is about multiple levers being pulled and we are confident that we will continue to remain agile and build that NIM expansion from here. So that is on the NIM part. Your second part was on the remittance and that story. So again let me just clarify. Remittance story was good and NR deposit story was good and we crossed 1 lakh crore deposits of NR. Our NR book term and SAAB put together has crossed 1 lakh crore. The fact remains that our resident SA and resident car and resident term deposit have grown even faster than our NR growth.
So it is so it’s not that our balance sheet is driven, the growth is being driven by NR remittances and NR deposits. Again it is a multiple lever story. So just clarifying that. And remittances as of now remain elevated. But you know, I don’t know how this plays out is anybody’s guess. But my sense is that unless you see significant job losses and returning Indians from UAE for good into India, I don’t think this story is likely to change immediately. Whether that happens or not, I can’t predict.
But if that doesn’t happen, I think Middle east will be in a rebuild mode and that will probably need more people to go there and therefore robustness of that remittance may continue. So, so I would say early to say anything negative about it. As of now we are seeing positives in it.
Souvik Roy
So thank you sir. And just a follow
Krishnan Subramanian Manian
Up on margins, we have seen that you know, even larger Banks
Souvik Roy
Are facing it difficult to pass on the December 25 basis point rate cut. So like how is federal placed on this
Krishnan Subramanian Manian
Front? And number two, is there any day count impact on NIMS this quarter? Is there any day
Akshay Jain
Count impact?
Krishnan Subramanian Manian
Yeah, so it is day count impact is there. But I mean we just take it in our stride. That’s it. It is there. Of course, day count impact is there. So just answering your last one first before that going back, you know, of course we have to compete in the market and we have to pass on the rate as required. So obviously, you know, like I mentioned, we have defended our nim. Does not mean the defense came only through assets or liabilities. Right. Obviously our asset yields would have dropped and our cost would have dropped and we have maintained the nim.
So as I said, as long as in the segments that we want to build growth, we continue to find the risk return. Okay. We are happy to compete and only when we find that the risk return trade offs and roes are not good enough is when we are hesitant. But just now we are not seeing that in our chosen areas of growth. After that I will be happy to get some more yields on assets. That is another thing we are working on. We are also increasing the discipline on pricing through pricing tools, raw based tools and things like that.
All that is of course part of the execution process which we are, which we remain focused.
Akshay Jain
Okay, sir, thank you for the answer.
Krishnan Subramanian Manian
And just to just to just to repeat that both on NIM as well as on roa, we are back to our pre rate cut cycle
Akshay Jain
Levels
Krishnan Subramanian Manian
And those were at the peak of the cycle and what we have now are at the bottom of the cycle. So I would like to believe that there is a qualitative difference between the same name and ROA between then and now.
Operator
Understood,
Krishnan Subramanian Manian
Thank you.
Operator
Thank you.
Krishnan Subramanian Manian
Thanks.
Operator
Our next question comes from the line of Piran engineer from clsa. Please go ahead.
Piran Engineer
Yeah. Hi team. Thanks and congrats on the good set of numbers. Just firstly sir, as we think about calibrating or we have been calibrating business banking growth, you said because of yields and asset quality, won’t that impact our current account growth?
Krishnan Subramanian Manian
No. So Piran, no, that is not impacting our current account growth. That is at some level they are connected, but it is not that they are 100% connected. Both work. Yes, I agree that both will feed into each other and will be better. But having said that, we can grow our current account irrespective of what we do on BUV.
Piran Engineer
Okay. And our target CASA ratio of 36% stays. Right?
Krishnan Subramanian Manian
Why not? As you know we are close to 33 now, right? 32.94. We are almost 300 basis points up since we started this journey. Right. So if we can do that in 12 months, why should we not? 12 to 12, 15, 18 months we have done that. So there’s no reason for us not to believe 36 is. 36 is gettable at some point. Yes,
Piran Engineer
Fair enough. Secondly, just on fee income growth now last year we’ve done much better than our peers. One part of it was just rationalizing fees across various products. It will be like a one time reset right now from this base, how should we think about the drivers of fee income growth or the drivers of a fee to assets ratio upward going forward?
Krishnan Subramanian Manian
Right. So you know in the past also I have said that there are three. Apart from general banking fees which we have reset some of it and we have worked on increasing them. There are three key drivers of fees. One, credit card fees, second, wealth management fees and third, trade and forex fees. So we have seen some traction in trade and forex but we can do more, we believe we can do more in card. We are growing fairly at a good clip and I think we will continue to build that. And that journey is just about begun and wealth journey has just not even begun.
I would say we are just a few months into that business. So I think there are enough levers again there for us to continue driving fees.
Piran Engineer
Got it, Got it. And just the last question for Venkat sir, now that you moved on from the CFO role, what functions will you be overseeing?
Krishnan Subramanian Manian
He will oversee the CFO role. CFO will report into him. It’s more a separation than giving up the role. We have separated the role of CFO from Venkat. So Mani will be the CFO and he will report to Venkat. Since he has now been elevated to the ED level, he has other not
Venkatraman Venkateswaran
To worry.
Piran Engineer
Understood, Understood.
Krishnan Subramanian Manian
Many of the support functions, many of them apart from CFO IT ops there many of them which roll up into Venkat.
Piran Engineer
Got it, Got it. Yeah. Okay, so that’s it from. I thank you and wish you all the best and thank you once again for not discontinuing that Saturday Vala practice. Thank you for that.
Souvik Roy
Next question please.
Operator
Next question comes from the line of Kunal Shah from Citigroup. Please go ahead.
Kunal Shah
Yeah, thanks for taking the question. So firstly after this one time provisioning that we had done, does it change our credit cost outlook? Maybe would we require a slightly lower provisioning given that we have already scaled it up or maybe transitioning into ECL we would still continue to maintain like say 45, 50 basis points of credit cost guidance.
Krishnan Subramanian Manian
Yes. So our credit cost guidance is not influenced by this action. This action is primarily as a transition into ecl. Primarily. That is the purpose of this. Just to clear Kunal, our credit cost guidance has been 50 to 60 basis points in the past. Of course we have done better than that in this year. But broadly we have. If you take the year, we are about 56 basis point. Yeah, maybe
Kunal Shah
Last few couple of quarters it’s been between 45 to 50 but we still continue with 50 to 60 basis points of guidance. Keep
Krishnan Subramanian Manian
The guidance there especially. We don’t want to meddle with the guidance just now of the uncertainties in the environment just now. We don’t want to review our guidance for now. But having said that, if the situation clears and there is better clarity on this Middle east and other geopolitical issues, we will review and let you know. But right now we don’t want to change our guidance on
Kunal Shah
That. Sure. And in terms of the exposure linked to Middle east, maybe on the liability side, we know the proportion which is there on the NR deposits. But looking at our presence out there in south, would there be on the retail side? Maybe. What percentage of maybe the portfolio could be exposed to Middle east and could there be any risk out there?
Krishnan Subramanian Manian
You are talking about asset side portfolio. Yeah, on the asset
Kunal Shah
Side. Yeah, maybe particularly for maybe the families which are based out of Middle east and we would have given them the loans over here. Okay.
Krishnan Subramanian Manian
So all I can tell you is that it is not a large exposure and our segment per se is a more liability centric segment than asset centric segment. So it’s not a large exposure. And like I mentioned a while back, unless we see job losses and. People returning back to India kind of a situation we don’t see, we don’t expect trouble. Just having told you that we have gone through this situation post Covid as well. Right. When a lot of disruption on this front we saw. But even then the trade costs were reasonably controlled and stable.
So we as of now we have no reason to believe that it will be dramatically higher. It will have high impact.
Kunal Shah
Sure. And just one last clarification is the entire IT favorable orders have been considered in this quarter because the filings which have been done and the benefit which is flowing in there is some deviation out there. So will there be more that will come through in the first quarter or largely it is accounted For.
Krishnan Subramanian Manian
No, no. What we have reported is our close to 1500 crores of approximately 1500 crores of refund. Now refunds have three parts to that. One impact of that is interest on that refund that we have got which is the 456 crore number that you see as a one off. The second is tax provision reversal which is 115 crore roughly. Number that is the second and third is the balance sheet. Rest of it is a balance sheet item which is excess tax paid, refunded back. So all the 1500 crores that we have reported earlier have been accounted for in this.
Kunal Shah
Okay, so 900. 950 is directly into the balance sheet.
Krishnan Subramanian Manian
Yes, that’s right. Roughly. Yeah. 115 and the balance.
Kunal Shah
Perfect. Yeah, got it. Thank you. Other
Krishnan Subramanian Manian
Assets on the balance sheet. Yeah,
Kunal Shah
Got it. Got it. Yeah. Thanks. That’s helpful. Yeah, thank you.
Operator
Thank you. Our next question comes from the line of MD Mahesh from Kotak Securities. Please go ahead.
Krishnan Subramanian Manian
Hi. A couple of questions from my side first. Again continuing on. Also on the ECL side, just if you could just kind of give us some color on does the 50 to 60 basis points of credit cost deciding continues in that regime
M. B. Mahesh
As well or is there a reassessment to that number?
Krishnan Subramanian Manian
No, that we have to reassess, Mahesh. That is as things stand today. You know our past guidance was that. So all I said was we are not changing the guidance just now. ECL change in change in the West Asia situation and all that are events which we have not built into that.
Souvik Roy
Just if you were to ignore the Middle Eastern crisis today, if you could just kind of give us. How are you thinking about how does ECL change the provisions for you,
Krishnan Subramanian Manian
Mahesh? Yeah, it’s still too early. We are assessing that. Let’s come back to you with a proper studied response on that rather than quick response. As you know, this came only two days back. We are still evaluating what the full implications will come back to you.
Souvik Roy
Okay. The second question is that in terms of the given conditions at which we
Krishnan Subramanian Manian
Are today, are you. Would you, would you delay the kind of riskiness of the profile that you are trying to build today? Will there be some delay to it or you would say that there is nothing required at this stage. We can continue with the current plans that you are having.
Akshay Jain
Let’s
Krishnan Subramanian Manian
Assume that if you are building your lab book, if you want to build your personal loan book or your credit card book or your MFI book a little bit faster, does this
M. B. Mahesh
Things
Souvik Roy
Change today or you say that it’s not required right now.
Krishnan Subramanian Manian
No, no, no. I think nothing has changed in our plan. I think as of now we have no reason to rethink our plan. Nothing has happened which makes us rethink or reevaluate our plan. We will continue to build that. We will continue to focus. If you have seen, we have begun in a small way to build the MFI last quarter. So I think our plans do not change cards. We are building as we have seen that is unsecured. Nothing changes in our mind. Just know.
M. B. Mahesh
Sorry, just one
Krishnan Subramanian Manian
Clarification in your internal policy. Till what can you take your gold loan portfolio to.
Venkatraman Venkateswaran
Currently Mahesh, the gold loan portfolio is around little less than 14%. And we haven’t set the kind of any outer limit. But it’s well within our risk appetite and we’ll take a call. Let’s say if it goes closer to 20% we’ll reevaluate at that time and decide. Nobody appropriate or not. But nothing like a feeling at this stage.
M. B. Mahesh
Okay, perfect. Thank you.
Operator
Yeah,
Krishnan Subramanian Manian
Thanks.
Operator
Thank you. Our next question comes from the line of Jay Mundra from ICICI Securities. Please go ahead.
Krishnan Subramanian Manian
Yeah. Hi sir. Good evening and thanks for the opportunity. So first question on the gold loan practices. So gold loan, of course the prices vary quite a lot. And even in third quarter they would have varied from you know, more than 15,000 per gram or maybe 16, 16 and a half thousand per gram to now one 15,000 or below. Do you calculate the gold prices on a daily basis or you do some 1 month 2 month average or there is a cap at the upper level.
M. B. Mahesh
How does this work?
Krishnan Subramanian Manian
I’ll ask Harsh to answer that. So what we do is the two things which we do. One is we take the last 30 working days average gold price and the previous days gold price. The lower of the two is taken. That’s a normal course. In times of extra volatility we reduce the LTVs also. I mean we reduce the LTV also. There are two tendency. Does it answer your question? No. So we take the lower of the two last day as well as average of last 30 days as well as last day. We take the lower of the two and apply.
Souvik Roy
And apart from that depending on volatility. Like in March 4th when we saw increased volatility we had also increased the margin over there. So that we protect the portfolio. At this point of time our Global Portfolio LTD is below 54%,
Krishnan Subramanian Manian
Right? No, that is very helpful this year. And the second question is sir, on cost to income, like we had a Guidance that
M. B. Mahesh
We gave in the strategy day. Does that hold or you know, I mean any thoughts on that cost to income guidance.
Krishnan Subramanian Manian
If you see our numbers even this quarter and if you adjust for the one time we are in the 53ish range. Right. And we had always guided that we will remain in this range bound in this to be driven by kind of range bound we will remain depending on the quantity. It has some seasonality impact as well. But right now we have again no reason to change our guidance on that. We will stick with our guidance for now. We have done slightly better than the guidance in the year. But I would say we would right now keep the guidance.
Guidance. Sure. Thank you. And all the worries. Thanks.
Operator
Thank you. Our next question comes from the line of Param Subramanian from Investec. Please go ahead.
Akshay Jain
Hi, good evening. Thanks for taking my question. Congrats on the quarter sir. So my question is on the in slide 17 you’re showing your overall retail banking, your retail advances and that is you know the overall retail book is flat. Yoyo now I picked up at the beginning you mentioned that there is some deposit repricing left. The repo rate cut pressures look like they are behind. Would it be fair to assume that you will now start pushing the pedal on this which you have not been doing for the last year or so
Krishnan Subramanian Manian
Primarily Param. If you look at one of the retail thing that affects our growth overall retail growth is the home loan business. Our lap is growing, our gold is growing, our agri is growing, CDC is growing, MFI is growing. So there are majority of but the weightage of the home loan book is large which is the largest book and therefore that overall drags our growth number down on retail on home loan. I am quite clear that we will remain agile. If we think our if the pricing get in the range where that risk return trade off is acceptable to us, we will as a product we don’t have anything against it just now.
The current market price is what you know on a lighter Note, you know 15 year home loans are getting priced at 7.15 and deposits are going at higher rates than that. Gasp for right. So we don’t see any sense in pushing that pushing the pedal on that. So as and when it makes more sense to us. Yes, we will look at it.
Akshay Jain
Perfect sir.
Krishnan Subramanian Manian
Credit card. All the retail segments other than home loan as a product. Auto. Probably to some extent again auto. The rate pressures have been high but more driven by home loan. So home loan is something that drags it down.
Akshay Jain
Yeah, got it sir. Sir, again now on the mix. Right, so where are we right now in our journey, sir? I mean you’ve made great progress on say shifting the mix towards medium yield as you called out. But where are we any medium term target? Because I was just checking the presentation that you made in February last year. So the, the classifications I think are slightly different. So any numbers you’d call out in terms of the mix, it’s low, medium, high that you’re calling out in slide 19.
Krishnan Subramanian Manian
Yeah, 19. No. So Param that that brings that journey is still as I said in my early. This is a medium, medium term journey. Right. Because it’s a book incrementally we can change the volumes quickly but the book takes time to do. And if you look at our journey in the last say one year, March 25th to March 26th, our low yield book has dropped from 52.2 to 49.8 kind of numbers, right. It’s about 2, 2.5% movement and our mid yielding segment has moved by again similar number about 2.5%. But the more interesting part if you ask me going forward in the quarters to come is also the high yielding book, right.
If we try to our cards has been consistently growing mfi we have begun to grow again. Pl we have begun to grow again. So I think there is potential to grow some of that. So I think this journey is still. We are in the journey. I don’t think we have reached where we want to reach.
Akshay Jain
So one last question if I may see on the corporate book, I mean what we can see in terms of data, it seems
Krishnan Subramanian Manian
To suggest that the corporate spreads are improving. So would you. Is that something that’s a growth avenue for next year? Because I’m just trying to understand because low yielding is still like 50% of your book what they’re calling out in that time. Housing, you’re saying we are still
Akshay Jain
Going to be cautious. So is corporate something that you are more positive on growth going into next year?
Krishnan Subramanian Manian
So corporate. Two things I would tell you. One is of course within corporate we are also putting more focus on the mid market rather than very large corporates which gives us a yield uptick. So that last year almost 75% plus of our NTD acquisitions have been more in the mid market companies rather than the large companies. So that is one effort that is going on that will show up in terms of yield. The second more important thing about corporate is unlike retail in the corporate it is probably easier to target wallet, revenue wallet and get a better share of that and therefore Things like I mentioned trade forex and current account.
If you see our self funding ratio has gone up in corporate. So liability business, our CMS platform has continued to do well. So I think there is opportunity in the corporate to look at a customer level revenue and do better more easily than it is in the retail side. In retail side cross selling is more difficult. So I would say in corporate, yeah, we don’t want to grow corporate at 18 20% kind of rates but early double digits. We are happy to keep growing that but there our focus will be to increase cost and increase profitability rather than just the book.
Corporate is less of a book business. Right? It is booked and new business.
Souvik Roy
Perfect, Very useful. Thank you so much sir. Congrats on the quarter and especially the phenomenal progress on casa. Thank you.
Operator
Thank you. Our next question comes from the line of Nitin Nagarwal from Motilal Oswal. Please go ahead.
Krishnan Subramanian Manian
Good evening everyone and congrats on a strong quarter. I have one question like is on the branch expansion. We have opened like lower branches this year versus what we opened last couple of years. So how critical
Rikin Shah
Is branch expansion for us to sustain this liability and the CASA mix growth as that has been one of the key focus area. So how do you think about that?
Krishnan Subramanian Manian
So Nitin, if you recall in our earlier call we have discussed that we in the first half of the year we deliberately went slow because we wanted to bring more science into evaluation of our existing network and how we plan our future network which is an exercise we did. We also wanted to work on rebranding and redesigning our branches going forward. So we have decided that we will keep the number low in the first half and as we get comfort with that exercise we will start building the branch network back.
And of course we finished that exercise and we have, as you know we did a brand lead relaunch. We have a new branch layout also in place now the design in place. We have also completed the exercise about studying our network. We have also come to conclusions on what we need to what restructuring of existing network we need to do in terms of relocation, relocation, restructuring a branch, relocating a branch and things like that. So now we have more comfort and that’s why you see in the last quarter alone we have added over 30 branches, 39 branches.
39 branches in the last quarter. We think we will continue to be focused as of now. We plan to launch about 100 branches in the next year. So yes, branches are important in the liability strategy. But remember the part of the restructure exercise and relocation Exercise will also improve productivity of the existing network. So our CASA growth is not again just a number of. Just an outcome of new branches that we will put. It is also about how to get more out of existing network. And that that is an important consideration for us.
Right?
Operator
Got it, sir. Thank you, man. Sir, thanks so much. Thank you. Our next question is from the line of Rohit Arhuja from Lotus Lion Ventures. Please go ahead.
Akshay Jain
Hi. Thanks for the opportunity. Hi. You’ve demonstrated strong operating leverage with cost of income falling sharply and ROA improving to around 1.36%.
Venkatraman Venkateswaran
How do you see this going forward? Like what could the
Akshay Jain
Drivers that could possibly take it above 1.5% and do you see any execution risk that could prevent that from happening?
Krishnan Subramanian Manian
First, let me just put a note of caution on that. If you notice our debt we have with one offs and without one off stated so in fact in entire commentary that Venkat used, he used the without one off ratios. Right? So with one off it looks like 1.36 but without one off it is 1.24. So just for the purpose of clarity, I thought I’ll mention that having said that. Yes, journey is to where you are saying. And that is something that we will continue to work on. And that as I said again all the three at a broad level, as I always say that there are very three simple things to do.
They are not as simple as I. Of course that was in a lighter veil. But liability, cost and therefore mix and right mix on the liability. Liability right mix on the asset side second and fee growth is third. The fourth potential can be the cost aspect. But as I have always guided in our next 12 to 18 months journey, I think we don’t want to guide on cost too much. But on the other three we want to continue maintaining that momentum of improvement. As you can see, we touched 1% ROA 3 quarters back.
We are up to 1.24 just now. So let’s see what we can maintain. Of course this was an exceptional cycle rate change cycle. But yes, our objective is to continue the trajectory of expanding both NIM fees to assets as well as ROA roe. Therefore resulting.
Operator
Thank you. Our next question is from the line of Anandama from MK Global. Please go ahead.
Akshay Jain
What is the LCR for our quarter?
Krishnan Subramanian Manian
119.
Akshay Jain
And you plan to maintain the rounding levels or you want to take it up?
Krishnan Subramanian Manian
Yes, we are comfortable with 115 to 120 range. Yeah.
Akshay Jain
Second, I think you talked about the. You know, there are no job losses as yet and so you do not see any immediate retail stress but on the MSME and the business banking side you see some stress. Customers coming and talking about that they do stress at this point of time and restructuring. What’s the ground situation at this point of time? Can you just talk about that?
Krishnan Subramanian Manian
Anand, based on our current portfolio behavior we have no reason to report any stress. If you have seen our slippages they have remained 0.74% which is low. I mean it’s in very acceptable range that it has been all the time. And even looking at our current SMA 1, 2 we have no reason to believe that there is any stress building up in our portfolio just now. But this is always an evolving situation and I don’t know how deep this problem gets but all I would say is I don’t have anything to report as on today.
Akshay Jain
So the provision that we have made this current quarter floating provision that is more towards ECL than the sec. Yes, absolutely. The
Krishnan Subramanian Manian
Floating provision has nothing whatsoever to do with asset quality. Our asset quality remains absolutely robust, no deterioration in it. This is primarily as a transition to ecl.
Akshay Jain
And sir, what will be the overall ECL impact? If you have assessed
Krishnan Subramanian Manian
We will come back to you on this. We have not yet fully assessed the impact. There are of course this is just two days old final. We will work on that and come back with our numbers based
Akshay Jain
On the older, based on the older guidelines in October 2025. What will be the impact
Krishnan Subramanian Manian
To new guideline? There is a lot of change Anand, because the floors, I mean there is a lot of change from old guideline to the draft there was a lot of change. I think what has not changed is draft to this outcome. Not much has changed but we will assess the full impact and come back.
Akshay Jain
Sure sir.
Krishnan Subramanian Manian
All I can tell you is that our asset quality is reasonable and robust. Whatever impact will have, of course it will be an industry wide impact and therefore we do hope that given our robust asset quality our impact should be reasonable.
Operator
Thank you. Our next question comes from the line of Jayant Karote from Access Capital. Please go ahead.
M. B. Mahesh
Thank you for the opportunity and congrats on a great set of numbers. The first question is on the LCR disclosures. I see it’s fallen below 120%. This is almost like a 20% point IOI decline and it’s been steadily moving down. What is your internal board level threshold and what is your comfort level to operate at? And the context of this question is as we are accelerating on growth the ask from our CASA growth will probably move beyond 20% next year if the LCR lever is not in the same quantum.
Krishnan Subramanian Manian
So this LCR with respect to CASA and all that, I don’t know. That is a complex question. So I will not get into that. All I would say is we are currently operating at about 120%. Roughly we are comfortable operating at 115 to 120% and in fact we have consciously brought it down from earlier levels of 135, 140 that we used to maintain earlier. That is a NIM destroyer. Right. Higher LCR than required is also a NIM destroyer. So it’s a conscious call. And we are quite comfortable with 150 and 120. As you know, regulatory requirement is 100.
So we are quite comfortable.
M. B. Mahesh
So 115 to 120 is your comfort zone. The second question is with regards to your credit card book growth, it is moving quite differently from the industry. 23% YoY. What would be the growth in interest earning assets and to assume the transactor growth will be much higher.
Krishnan Subramanian Manian
I’ll ask Virat to take that question. Yeah. In terms of your assumption is correct. The growth of transactor is pretty robust because bulk of the credit cards, organic credit cards that we issue are given to our existing customers. So from that point of view the transactor percentage is growing. But having said that, the overall interest earning book has also seen some growth and more on the side rather than the revolver side.
M. B. Mahesh
This is very helpful sir. Thank you and all the best.
Souvik Roy
Thanks. Thanks James and operator. With this we close the call and thank you all for joining us today. To Manisa on his appointment as the CEO of the bank and we wish him on that close. If you have further queries, feel free to reach out to us. We’ll be available for further chat. Thank you so much and have a lovely day.
M. B. Mahesh
Thank you. Thank you so much.
Operator
Thank you on behalf of Federal Bank. That concludes this conference. Thank you all for joining us. You may now disconnect your lines.