Tag: Federal Bank

Federal Bank’s new CEO search in advanced stage, can’t comment on names: Shyam Srinivasan

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shyam Srinivasan, the Managing Director (MD) and Chief Executive Officer (CEO) of Federal Bank, on Thursday (May 2) said that the lender’s board has set up a search panel for evaluating candidates for the position of Managing Director and CEO.

However, when questioned about specific names forwarded to the Reserve Bank of India (RBI) for consideration, Srinivasan declined to comment.

Reports of KVS Manian’s resignation from Kotak Mahindra Bank on April 30 prompted speculation that he might be among the contenders for the leadership role at Federal Bank.

Shyam Srinivasan, who has been serving as the CEO of Federal Bank, is scheduled to complete his term in September 2024.

Turning to the bank’s financial performance, Srinivasan highlighted positive indicators in the fourth-quarter results.

He clarified that despite some numerical complexities due to a one-time pension impact of ₹162 crore, the quarter showcased strong operational metrics such as expanded net interest margins (NIMs) and net interest incomes (NIIs), alongside robust credit and deposit growth.

For the fourth quarter, the bank witnessed a 15% rise in its Net Interest Income (NII), which stood at ₹2,195.1 crore in Q4 compared to ₹1,909.3 crore in the same period of the previous financial year.

Federal Bank’s slippages reached 13-quarter low, alongside an improvement in Net Interest Margin (NIM) exceeding expectations.

The bank attributed quarter’s operational strength to factors such as a provision write-back, a first-time occurrence in over nine years, which supported the bank’s bottom line.

Looking forward, Srinivasan foresees a loan growth of approximately 18-20% for the financial year 2025.

Additionally, he expressed confidence in Federal Bank’s ability to regain momentum in acquiring Current Account Savings Account (CASA) deposits.

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Federal Bank Q4 profit remains flat, announces dividend of ₹1.20 per share

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Federal Bank on Thursday (May 2) reported a 0.4% rise in net profit to ₹906.3 crore for the fourth quarter of FY24. In the same period last year, the bank had posted a net profit of ₹902.6 crore. This performance comes slightly below CNBC-TV18’s poll estimate of ₹931.6 crore.

The bank witnessed a 15% rise in its Net Interest Income (NII), which stood at ₹2,195.1 crore in Q4 compared to ₹1,909.3 crore in the same period of the previous financial year.

In terms of asset quality, the bank exhibited improvement as its Gross Non-Performing Assets (NPA) ratio decreased to 2.13% from 2.29% in the previous quarter.

Similarly, the Net NPA ratio also saw a decline to 0.6% compared to 0.64% in the previous quarter.

Moreover, the Federal Bank reported a provisions write-back of ₹94.6 crore, an increase from the provision of ₹91.2 crore in the previous quarter.

Slippages decreased to ₹371 crore from ₹496 crore sequentially.

Additionally, the bank’s Net Interest Margin (NIM) stood at 3.21%, showing a slight improvement from the previous quarter’s 3.19%, though it remained lower compared to the same period last year when it was 3.36%.

In addition to the financial results, the Board of Federal Bank has recommended the payment of a final dividend for the financial year 2023-24.

The proposed dividend stands at ₹1.20 per equity share of face value ₹2 each, amounting to 60% of the face value.

However, the dividend payment is subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Bank.

Earlier in the day, Federal Bank shares hit a 52-week high, with the stock rising by nearly 5% to reach ₹170.25 apiece on the BSE.

It has been reported that Kotak Mahindra Bank’s KVS Manian, who resigned on Tuesday (April 30), may be moving to Federal Bank.

CNBC-TV18 had earlier reported, citing sources, that Manian is among the short-listed candidates for the position of the new Managing Director & CEO.

However, there has been no official announcement regarding Manian’s potential appointment or any other leadership changes within the Federal Bank.

Shyam Srinivasan, who has been serving as the CEO of Federal Bank, is scheduled to complete his term in September 2024.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Federal Bank surges to 52-week high ahead of Q4 results, speculations rife over new leadership

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Federal Bank shares hit a 52-week high on Thursday (May 2). The stock rose by nearly 5% to reach ₹170.25 apiece. This surge comes just ahead of the bank’s board meeting where it is expected to report its financial results for the March quarter and unveil future plans and initiatives.

One of the driving factors behind this surge is speculation surrounding the bank’s leadership.

Kotak Mahindra Bank’s KVS Manian, who was recently elevated as Joint Managing Director, resigned on Tuesday (April 30), sparking rumors that he may be moving to Federal Bank.

CNBC-TV18 had earlier reported, citing sources, that Manian is among the short-listed candidates for the position of the new Managing Director & CEO.

However, despite widespread speculation, there has been no official announcement regarding Manian’s potential appointment or any other leadership changes within Federal Bank.

Shyam Srinivasan, who has been serving as the CEO of Federal Bank, is scheduled to complete his term in September 2024.

In March, Federal Bank stopped issuing new co-branded credit cards, citing regulatory guidance from the Reserve Bank of India (RBI).

The move came as part of the bank’s commitment to rectify areas of deficiency outlined in a letter from the RBI and to ensure compliance with regulatory standards.

The Federal Bank, in its notice, assured customers that it is actively working to address the identified issues and will seek regulatory clearance before resuming the issuance of new co-branded credit cards.

At the time of writing this report, Federal Bank shares were trading over 4% higher at ₹169.10 apiece on BSE.

ALSO READ | Kotak Mahindra Bank shares fall after KVS Manian resigns, Nuvama downgrade

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

OneCard’s access to customer data likely forced some banks to stop issuing co-branded credit cards

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Co-branded card fintech firm OneCard’s access to credit-card customer data is believed to have driven the Reserve Bank of India (RBI) to ask a few banks to stop onboarding new customers on the platform, multiple industry executives have told Moneycontrol.

OneCard has co-branded card partnerships with Federal Bank, SBM Bank, South Indian Bank, Bank of Baroda, Catholic Syrian Bank and Indian Bank.

While only Federal Bank and South Indian Bank have decided to stop onboarding new customers, others are likely to follow suit.

“In the case of OneCard, it did not have any direct access to customer data but for all the co-branded cards that the banks issued with OneCard, banks were using the credit-card software stack provided by OneCard. This gave OneCard access to customer data indirectly,” a senior executive with a credit-card product company said on condition of anonymity.

According to RBI regulations, only credit-card issuers — banks — can access customer data and not their co-brand partners. For instance, in the case of Amazon Pay-ICICI Bank credit card, the e-commerce giant can’t access customer data.

“The card-issuers shall not share card data (including transaction data) of the cardholders with the outsourcing partners unless sharing of such data is essential to discharge the functions assigned to the latter. In case of sharing of any data as stated above, explicit consent from the cardholder shall be obtained. It shall also be ensured that the storage and the ownership of card data remains with the card-issuer,” an RBI circular of March 7 said.
OneCard co-branded cards seem to violated this provision, the executives Moneycontrol spoke to said.

OneCard did not respond to Moneycontrol queries. The banks couldn’t be reached immediately for comments. The story will be updated once we get their responses.

The pause was most likely temporary and once OneCard starts accessing customer data in encrypted form, the banks would start issuing cobranded cards again, a card network executive said.

Credit card management software looks at various fees, charges and rewards calculations among other things. The stack also connects the software with the processing switch, which connects the credit card to card-networking companies such as Visa, Mastercard and Rupay.

OneCard has partnered with fintech M2P to develop the stack along with deploying the processing switch.

“These banks had their credit card management stack, but OneCard acted as the technology service provider (TSP) for their cobranded cards. This gave them access to customer data. Now probably RBI want banks to encrypt this data before sending it to OneCard’s stack or use a different technology stack altogether,” said a senior bank executive, who looks at card and digital business along with fintech partnerships.

According to the OneCard website, its co-branded credit card comes with an app that gives customers full in-app control — from real-time transaction tracking, spends management, EMI conversion to payments.

OneCard can provide all these details on a non-banking app along with other unique features because it runs its technology stack, which was its unique selling proposition (USP) in the card business.

Founded in February 2019 by Vibhav Hathi, Anurag Sinha and Rupesh Kumar, FPL Technologies, OneCard’s holding company, has raised $227 million in funding from investors like Temasek, GIC, Matrix Partners, QED Innovation, Hummingbird Ventures and Sequoia Capital.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Federal Bank stops issuance of new co-branded credit cards following RBI directive

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Federal Bank has stopped issuing new co-branded credit cards, citing regulatory guidance from the Reserve Bank of India (RBI). The move comes as part of the bank’s commitment to rectify areas of deficiency outlined in a letter from the RBI and to ensure compliance with regulatory standards.

The Federal Bank, in its notice, assured customers that it is actively working to address the identified issues and will seek regulatory clearance before resuming the issuance of new co-branded credit cards.

Despite the temporary suspension of new co-branded credit card issuance, the Federal Bank said it remains committed to serving its existing customers who currently hold co-branded credit cards.

Customers with these cards can expect continued support and service from the bank.

In addition, the Federal Bank emphasised that it will continue to offer credit cards in the non-co-branded segment.

In another development, South Indian Bank also announced a temporary suspension of on-boarding new customers for its co-branded credit cards in compliance with RBI’s directives.

Earlier this month, RBI introduced new guidelines aimed at providing more options and flexibility for credit card customers. The central bank said card issuers must allow eligible customers to choose from multiple card networks at the time of card issuance.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Federal Bank shares drop 5% — This is why

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Federal Bank Ltd. fell as much as 6% in opening trade on Tuesday after some top-level rejig that took place at its private peer Kotak Mahindra Bank on Monday evening.

Kotak Mahindra Bank informed the exchanges that KVS Manian, the current Whole-time director at the bank has been elevated to Joint Managing Director, while Shanti Ekambaram, who was also a Whole-time Director, has been elevated to Deputy MD of the bank.

The reason why Federal Bank is impacted due to these developments is that CNBC-TV18 had reported on February 15 citing sources, that the lender had shortlisted KVS Manian’s name as one of its potential MD & CEO candidates to be submitted to the Reserve Bank of India. The lender is expected to submit three names to the central bank.

This is part of the succession planning at the Kochi-based lender. Federal Bank’s current MD & CEO Shyam Srinivasan, who took over the reins in 2010, will see his term end on September 22 this year.

According to RBI guidelines, a CEO can stay with a bank for 15 years if they are not a promoter. Based on this, Srinivasan was eligible to stay on for another year at the bank, a request the RBI rejected.

Shares of Federal Bank are trading 4.9% lower at ₹155. The stock has risen 23% over the last 12 months.

(With Inputs From Abhishek Kothari & Sudarshan Kumar.)

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Federal Bank shortlists Kotak Mahindra Bank’s KVS Manian as CEO candidate: Sources

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Federal Bank has reportedly shortlisted Kotak Mahindra Bank’s Director KVS Manian as a Chief Executive Officer (CEO) candidate. According to sources, the bank has listed two internal candidates for the Managing Director (MD) and CEO roles. The bank is expected to submit three names to the Reserve Bank of India (RBI) for approval. The process is part of the succession planning at the Kochi-headquartered bank.

“This process is overseen by the board in accordance with our succession plan,” Federal Bank told CNBC-TV18. The bank added that the process has commenced and it is committed to ensuring a thoughtful transition.

#FederalBank has shortlisted #KotakBank director KVS Manian as CEO candidate & two internal candidates for MD & CEO role: Sources

This process is overseen by the board in accordance with our succession plan, says Federal Bank to CNBC-TV18 pic.twitter.com/aUy72Z5WUp

— CNBC-TV18 (@CNBCTV18Live) February 15, 2024

Last month, the RBI rejected a plea from the Federal Bank to extend its MD and CEO Shyam Srinivasan’s tenure for one year.

Srinivasan, who took over the Aluva-based private sector lender in 2010, was eligible for an additional year. According to RBI guidelines, a CEO can stay with a bank for 15 years if they are not a promoter. His current term ends on September 22, 2024.

“This request was made in the context of the Reserve Bank of India’s permissible limit of 15 years on the term of an incumbent MD & CEO. (Mr. Srinivasan has been the bank’s MD & CEO since 2010),” Federal Bank said in a statement.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget ’24 | A deep dive into capex, connectivity and innovation: Federal Bank’s MVS Murthy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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For Federal Bank, which is deeply invested in India’s growth, to see a responsible Budget that emerge in an election year gives tremendous confidence about India’s economic outlook. We believe that the heart of this Budget is certainly its ability to desist from high deficits when growth is good.

In our view, the Budget that emphasise capex, connectivity, and innovation, will boost India’s economic outlook the following ways: 

Capex Spending: Fueling Broad-Based Economic Growth

The Interim Union Budget 2024-25 presented by Finance Minister on February 1,  continues with a strong focus on powering growth for all through capital expenditure (capex) spending. In my mind, capex spending creates concentric circles of growth in downstream industries. From harnessing solar energy to connecting the nation, to promoting tourism, to boosting our medical ecosystem, to incentivising innovation, to prioritising technology, the multi pronged approach to capex is creating multiple nodes of progress that are sending out ripples of prosperity among India’s households and businesses. 

Sustainable Energy and Connectivity: Cornerstones of Future Prosperity

India’s power demand is expected to grow by over 70% in the coming years. New solar power schemes and investments in wind will be core to how India powers her businesses and homes sustainably, in addition to removing barriers to entry for Indian products in international markets on the basis of their carbon footprints.

In the same vein, greater connectivity through Prime Minister Gati Shakti’s Master Plan for Multi-modal Connectivity will power efficiencies (and savings!) across manufacturing, in addition to creating greater resilience in our supply chains. 

 Boosting Employment and Tourism through Infrastructure Investment

 Investments in connectivity and green technology are already powering a new wave of job creation, bridging the economic gap between Bharat and India. The revamp of our rail bogies as per Vande Bharat standards, the UDAN scheme, and an increasing number of metro and Namo Bharat trains promise a closer coupling of our bustling metros and our heartlands.

It isn’t much of a leap to imagine the massive boost that the tourism industry will receive from the influx of domestic and international tourists, who will now find India that much easier to traverse. 

Initiatives like the Swachhta Rating Framework will also go a long way in removing other forms of friction that keep international travellers from exploring India’s hidden gems.

Also Read: India developing cleanliness framework to revolutionise tourism standards

This boost to tourism will, in turn, have a knock on effect on these places of public interest, spurring growth in local economies, and generating wealth and empowerment at a pin code level. 

 Empowering Technology and Innovation: Building a Digital India

India Stack and it’s building blocks like Aadhaar, UPI, Co-Win, API Setu, DigiLocker, AarogyaSetu, GeM, UMANG, Diksha, E-Sanjeevani, E-Hospital, E-Office and many more are creating an ecosystem that empowers technology first companies, even when they are in traditional sectors.

These tailwinds will help India’s startup ecosystem facilitate unicorns with increasing regularity, helping India cement her place as a global thought leader, and a hotbed of innovation. 

 Investing in India’s Human Capital for a Brighter Future

Of course, none of this works without the right people with the right skills. The budget seeks to grow India’s homegrown talent across the board, from agribusiness to an increase in the number of medical colleges is also a sound investment in India’s future, and that of the world, as a consumer of the products and innovations we will create in the years to come. 

In many ways, the Budget is an invitation for domestic and global companies to actively invest in India, access resources — natural, people and infrastructure — to benefit from its arbitrage, tap into the multiple segments of consumption, and give boost to their expansion plans for robust return on investments.

 It is also an invitation for Indian businesses to rise to the challenge. We have great possibility and greater responsibility to anchor Vasudaiva Kutumbam in Amrit Kaal. After all, good economics stems from good governance. 

—The author, MVS Murthy, is Chief Marketing Officer (CMO) at Federal Bank, one of India’s leading private sector banks. The views expressed are personal. 

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Federal Bank launches RuPay NCMC wallet debit card: Know steps to use it, transaction limit and more

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Federal Bank on Monday, February 5, launched National Common Mobility Card (NCMC) integrated debit cards. NCMC is a feature introduced on RuPay Contactless Debit Card which allows cardholders to make payments across NCMC-enabled terminals at metro stations, buses, etc in an offline mode, just by tapping the card on the card reader.

Federal Bank stated that this initiative is a step towards streamlining travel experiences by digitising payments.

To activate the NCMC functionality and begin using the card for offline transactions, cardholders are required to enable the “contactless feature” through mobile banking, internet banking, or IVR.

After activation, users can visit the customer care desk at metro stations to initiate activation and load money onto the card, either through cash or their existing savings account.

The maximum top-up limit for the card balance is set at ₹2,000.

Users can reload the card balance through various channels, including cash transactions at authorised transit points or by linking the card to their savings/current account.

The balance on the offline wallet can be enquired at designated transport operators’ POS terminals, and customers can update their balance after performing an “Add Money” transaction through the bank’s e-channels.

For offline transactions, customers must activate the offline wallet, maintain a necessary balance, and tap the card at the entry and exit gates of metro stations.

The Automatic Fare Calculator (AFC) system will deduct the fare from the offline wallet.

The upper limit for an offline payment transaction is set at ₹200, with potential changes based on guidelines, Federal Bank mentioned on its website.

Differentiating NCMC RuPay Debit Cards from regular RuPay Debit Cards, Federal Bank highlighted that the former is a dual-interface card supporting both online (contact and contactless) and offline (contactless) transactions.

Cards issued after April 2022 will exclusively support the NCMC feature.

Customers can identify the RuPay Contactless feature by checking for the contactless indicator printed on the card, the lender said.

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3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Federal Bank CFO explains three reasons for higher third quarter operating costs

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Venkatraman Venkateswaran, Group President & CFO of Federal Bank listed three key reasons for the spike in operating expenses during the third quarter: higher provision for wage revision, branch expansion costs, and investment in technology upgrades.

In a post-earnings call with CNBC-TV18, Venkateswaran said the bank increased the rate of provisioning for an upcoming wage revision to 17% from 15%. This led to a spike in the staff costs in the October-December quarter.

The bank also added about 65 branches in the first nine months of the year so far, which added to the quarterly costs.

He also noted that the bank is now able to achieve breakeven on new branches much faster than earlier. “Last year, we opened 75 branches, of which 41 have already turned positive in less than one year, i.e. it is at breakeven. This is something which we have seen improving over the years, it used to be two years prior or even more than that earlier. The fact that we are able to choose the right location, get the business, and see the branches turning profitable, is a healthy sign, which gives us confidence to invest more on the branches,” he said.

He said the bank is also investing heavily in upgrading technology from cyber security, to compliance systems, and the audit systems.    

Venkateswaran is confident the bank will be able to achieve credit growth of 18% to 20%.  The credit deposit ratio is currently at 83%, he said.

Also Read | RBI directs Federal Bank to submit two new names for MD and CEO

Federal Bank reported its Q3FY24 earnings on January 16. The net profit rose 25% year-on-year (YoY) to ₹1,007 crore from ₹803.6 crore in the corresponding period of the previous fiscal year. The net interest income for Q3 stood at ₹2,123 crore, slightly below a CNBC-TV18 poll estimate of ₹2,125.6 crore.

Also Read | Federal Bank responds to slashing of credit limits on Scapia cards — here’s all you need to know

The bank’s stock has gained about 5% in the past year, but is down nearly 8% year to date. The bank’s market capitalisation is at ₹35,155 crore. 

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow