Federal Bank plans to enhance its collaboration with Ageas Federal Life Insurance (AFLIC) by raising its stake in the private life insurer from 26 percent to 30 percent.

The bank’s board has authorized the signing of a binding Memorandum of Understanding (MoU) with Ageas Insurance International NV and AFLIC to secure an extra four percent equity stake, pending regulatory approvals and standard conditions.

Once completed, this acquisition will reaffirm Federal Bank’s long-term dedication to the life insurance sector, broadening its involvement in the expanding industry.

On the other hand, this acquisition is said to align with Ageas Federal Life Insurance’s plan to bolster its distribution channels and strengthen its presence in India’s changing insurance market.

Additionally the acquisition is expected to elevate Federal Bank’s investment in AFLIC from 26 percent to 30 percent.

 

The deal entails acquiring 3.2 crore shares at a price of Rs.30.45 each and is contingent upon regulatory approvals from the Reserve Bank of India (RBI) and the Insurance Regulatory and Development Authority of India (IRDAI).

The transaction is anticipated to be finalized by or before October 31, 2025. AFLIC, a joint venture between Ageas Insurance International NV and Federal Bank, reported a net worth of Rs.1,176 crore, assets under management amounting to Rs.17,455 crore, and a net profit of Rs.107 crore for FY24.

For the third quarter, the bank's net profit was Rs.955.4 crore, reflecting a five percent decrease year-on-year (YoY) from Rs.1,006.7 crore and falling short of the CNBC-TV18 poll expectation of Rs.1,022 crore. In the meantime, net interest income (NII) increased by 14.5 percent YoY to a record high of Rs.2,431.3 crore, exceeding the poll estimate of Rs.2,415 crore.

Regarding asset quality, the bank demonstrated improvement as its gross NPA reduced to Rs.4,553.3 crore from Rs.4,884.5 crore in the previous quarter. The net NPA also fell to Rs.1,131.2 crore, down from Rs.1,322.9 crore (QoQ).

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The gross NPA ratio improved to 1.95 percent, compared to 2.09 percent in Q2 FY24, while the net NPA ratio decreased to 0.49 percent, down from 0.57 percent in the prior quarter. In a filing with the stock exchange, the bank declared this its best asset quality performance in over 10 years, showcasing its strong risk management practices and commitment to financial success.