Whalesbook
Federal Bank Slows Home Loan Pace
Federal Bank is deliberately moderating its growth in home loans. The move comes as current market pricing offers less favorable returns. The bank will now focus on serving existing customers who use multiple banking products, rather than chasing new single-product clients.
Interest Rates Likely Bottomed Out, Bank Says
Federal Bank reported its yield on advances for the fourth quarter was 8.65%. The bank believes the interest rate cycle has likely reached its lowest point. Much of its loan portfolio is tied to floating rates based on EBLR or MCLR, meaning current yields are affected by this low-rate period. Management expects rates will now stabilize or gradually rise, supporting higher yields on its assets.
Net Interest Margins Remain Strong
Even with about 125 basis points of rate cuts from their peak, Federal Bank's net interest margins (NIMs) have proven quite resilient. Looking ahead, the bank projects modest NIM expansion of five to six basis points per quarter for FY27, though it noted this growth might not be perfectly steady.