FY21 loan growth seen at 8%; may look to raise funds in H2FY22: Federal Bank
Banks are in the spotlight on expectations of Reserve Bank of India’s (RBI) liquidity support and hopes of a strong recovery with the roll-out of vaccination. How are things shaping up on the ground and how are lending rates trending? Veteran banker, Shyam Srinivasan, MD and CEO of Federal Bank discussed.
Banks are in the spotlight on expectations of Reserve Bank of India’s (RBI) liquidity support and hopes of a strong recovery with the roll-out of vaccination. How are things shaping up on the ground and how are lending rates trending? Veteran banker, Shyam Srinivasan, MD and CEO of Federal Bank discussed.
In terms of growth, he said, "The full year growth for us would be closer to 8 percent and if the momentum continues then the next year it should be in teens."
Retail business is almost back to pre-COVID levels across category and geographies, he said. "I would believe that in calendar 2021 and FY22, we will come back to growth in the areas we want and overall clock about somewhere in the mid-teens," he said.
He believes the worst is over from an economic standpoint of view. "I believe that calendar 2021 should see an industry level of close to 10 percent and we would be well above that, maybe in the mid-teens," he added.
"We have been quite conservative in consuming capital. We are well capitalised at this juncture. However, as we go into the next financial year, there may be an opportunity towards the second half of this calendar year to do a capital raise. We have all the enablers in place," Srinivasan mentioned.
On asset quality, he said, "I do think if the recovery, which all of us are foreseeing, continues to be strong, maybe much of the anticipated fears won’t play through and it should be a better run. All indicators are suggesting that it will certainly be a reasonable outcome."
"Collection efficiencies have picked up quite materially and we see that trend continuing," he said.
According to him, increase in margins has been driven by the product mix.
"Blended cost of funds and the yield on the new assets have given us an expansion on margin. For the near-term that should sustain. We ended last quarter at about 3.22 percent, I do believe it will be in that zone or a touch above," he said.
"We are launching our own credit card, which should happen backend of this quarter for our internal trial and then by early next financial year for the customers. So that should start seeing traction," he said.
For more, watch the video.
(Edited by : Priyanka Rathi)
First Published: Feb 16, 2021 1:09 PM IST
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