Working on innovative products to attract deposits: Federal Bank ED
Amidst ongoing deposit competition in the industry, Federal Bank remains focused on strengthening its retail deposit base by focusing on right segments offering competitive interest rates and continuously delivering innovative liability product offerings.
Shalini Warrier, the bank’s Executive Director said that this effort has yielded positive results, as is evident from the fact that their deposits have grown by about 19 per cent (yearonyear) while industry growth is around 13.514 per cent.
The bank is working on offering tailored services and products to different segments, based on the needs of different customer segments. In the nonresident segment, it is leveraging its expertise and remittance network to expand business from nonGCC locations. This strategic move is expected to drive growth in NR deposits, she adds.
How is Federal Bank positioning to capitalise on growth opportunities in commercial banking, housing loans segments?
India’s credit growth in FY24 is likely to be around 19 per cent including merger impact and the bank also has grown at the same pace. Demand for credit remains strong in the country. We have a very strong relationship management network catering to commercial banking and housing loans.
Business banking is largely sourced by branches and well supported by relationship managers.
We are reckoned as a strong player in the home loan segment in the leading markets like Mumbai, Bangalore etc. We are the first choice for key developers of housing loan projects in the markets in which we compete. Commercial banking and business banking remain as part of our highfocus segments.
How does the bank plan to balance growth objectives, maintaining prudent risk management practices across lending portfolios?
The bank has a wellbalanced defined risk framework and that governs all credit decisions. We have always believed in and practised the mantra of diversification in loan books. Our asset portfolio is well balanced with 55 per cent in retail and 45 per cent in wholesale.
Within retail, our exposure to credit cards and personal loans is small, constituting only about 6 per cent of the overall retail book. Careful customer selection and robust underwriting and collection processes have helped the bank to maintain pristine asset quality consistently for many years.
Our credit architecture is governed by the principles of independence. Credit origination, underwriting, administration, monitoring and loan collections are all separate distinct units in the bank. Where algorithms and models are used, the models are subject to rigorous scrutiny and back testing before roll out. All of these help us to ensure that we continue to grow our lending book while maintaining strict control on quality. Our results speak for themselves!
What are the strategies to expand branch networks and increase geographic diversification?
“Digital at the fore, human at the core” is our approach to banking in general. While ensuring we have the best of digital capabilities for our customers, we have also been expanding our branch presence. We added 75 branches in the previous fiscal and are well on course to add about 135 branches in this fiscal.
The focus is on enhancing presence in the geographies where we have less presence and where economic growth is faster. In the last two years, our branch presence has significantly increased in Tamil Nadu, Karnataka, Gujarat, and Maharashtra. Branches were added in many other States too.
How does the branch expansion in Kerala and Tamil Nadu align with the bank’s broader strategic objectives and growth plans?
Having been established as the dominant bank in Kerala for many decades, we hold a significant market share and a strong presence across Kerala with 600 branches. Kerala represents a high potential market for nonresident customers and is part of a growing sunrise economy.
Tamil Nadu is contiguous to Kerala and expansion in this State was a strategic decision aligned with our “presence to prominence to dominance” (PPD) strategy beyond Kerala. In TN, we have been rapidly expanding, adding 39 branches last year and planning to add another 4550 branches in FY 24, bringing our total branch count close to 250.
Tamil Nadu’s fastgrowing economy presents ample opportunities across various business sectors, making it an ideal market for our lowcost CASA products, highyielding gold loans, and business loans.
The bank has a well-balanced defined risk framework and that governs all credit decisions. Our asset portfolio is well balanced with 55 per cent in retail and 45 per cent in wholesale
SHALINI WARRIER
Executive Director, Federal Bank