FEDERALBNK

Federal Bank (FB) has demonstrated strong business growth and is rebalancing its portfolio toward medium- and high-yielding segments like LAP, used CVs, gold loans, and credit cards to drive profitability. We estimate loan growth to sustain at ~17% CAGR over FY25-28E while bank maintains strong asset quality. Deposit growth is expected to accelerate to a 15.1% CAGR over FY25-28, supported by a CA-led CASA push, a stronger NR franchise, and the realignment of its branch network. We estimate CASA share to improve to 34-35% by FY28E. NIMs may face near-term pressure due to high funding costs, muted CASA growth, and T+1 repricing of a 51% repo-linked book; however, FB targets medium-term NIMs of 3.5% by FY28. C/I ratio is estimated to stay high at 53-55% in the near term due to investments in Neo, Project Udaan, and tech upgrades, though it is expected to improve with scale and productivity gains.