MOSL: THE CORNER OFFICE (FEDERAL BANK) — Business momentum remains strong

THE CORNER OFFICE (Federal Bank) — Business momentum remains strong; Asset quality and earnings profile to improve going forward

Ms Ashutosh Khajuria, ED & CFO

Mr. Ashutosh Khajuria is the ED and CFO of Federal Bank. He oversees treasury, corporate planning, inspection & audit, legal and the IFSC Banking Unit (IBU) in GIFT City, Gujarat.

 A Science Graduate from Banaras Hindu University, he also holds a Bachelor of Law degree and a post-graduation degree in Economics.

Mr. Khajuria joined the bank Bank in 2011 as President and Head-Treasury and was later entrusted with additional responsibility of business development, covering the entire network of branches/offices outside Kerala.

In a career spanning over 34 years, Mr. Khajuria has also worked with the SBI covering treasury, international banking, trade finance, corporate banking and branch banking. Prior to joining the bank, he was CGM and Head-Treasury in IDBI Bank. At present, he is also a director in IDBI Federal Life Insurance Co. Ltd.

We met Mr. Ashutosh Khajuria, Executive Director and Chief Financial Officer of Federal Bank (FB). Key takeaways:

Operating environment improving: Loan growth within the banking system has picked up with increasing demand in working capital loans, pick-up in SME and continued momentum in retail business. The recent NBFC crisis has put banks in an advantageous position and management believes that banks clearly have an edge over NBFCs in terms of cost of funds and also on the lending side banks have an advantage due to the space vacated by few NBFC’s. The bank aims to sustain its growth momentum (loan growth at ~25%) and will issue CDs, if needed to support this growth.

Loan growth to remain strong: Management guided of maintaining 25%+ loan growth in the coming quarters due to opportunities in the commercial and institutional banking portfolio. Within the corporate portfolio (~44% of the total loan book) almost half of the book is between INR0.25-1b, and the remaining has a ticket size above INR1b. On the retail side, the bank is diversifying towards high yielding retail loans like unsecured personal loans and CV financing (through partnership model). As of 2QFY19, the bank had an outstanding personal loan book of INR3b and has guided to increase focus on these high yielding segments. It also aims to double this portfolio over the next year.