Federal Bank Ltd. share price target

Healthy Operating Performance; Consistency Key to Valuations Federal Bank has delivered an in-line set of numbers in 1QFY20 led by NII growth of 18% YoY, a healthy 25% YoY growth in core fee-based income and 30% YoY growth in PPoP. However, slippages were higher than our estimate mainly led by elevated retail slippages, though higher write-offs aided GNPA ratio (+7bps QoQ). Further, NIM declined sequentially despite sharp rise in lending yields owing to continued pressure on cost of funds and one-off in 4QFY19. Notably, advances and deposits grew by 19% YoY each. Loan growth during the quarter was driven by retail loans, which grew by 26% YoY. CASA ratio continued to move southwards. Nonetheless,...

Federal Bank's numbers were a beat on our estimates. Net Interest Income/PAT growth of 17.8% and 46% YoY was 1.6/7.8% above our expectation. Operating profit came in fairly higher (+29% YoY) driven by a 45% growth in Non-Interest Income. GNPA due to slightly higher slippages in the quarter increased by 8bps sequentially to 3%. Credit growth though lower than our expectation of 20%, was decent at 18.8%. With NIM almost flattish at 3.15%, cost to income ratio improved by 240bps YoY to 49.4%. We largely retain our numbers on FY20/21 and re-iterate BUY' with a new TP of Rs124...

Operational performance came in healthy at 30% YoY to | 783 crore, led by higher other income at | 392 crore (~45% YoY). However, NII growth came in at 18% YoY to | 1154 crore, lower compared to our estimate. Margins improved 3 bps excluding one off of 5 bps in margins in Q4FY19. As of Q1FY20, margins were at 3.15%. Led by higher slippages in the quarter, provisions increased 8% QoQ, to | 192 crore, while stable YoY. Accordingly, PAT was at | 384 crore, up 46% YoY, largely in line with our estimates. Advance growth came in lower at ~19% YoY to | 113717 crore. However,...

Federal Bank posted good numbers PAT grew by 46% yoy led by stable asset growth & margins, higher treasury gains which the bank offset with higher gratuity cost. There was slight disappointment on higher slippages reported on retail and business banking segments and slower growth in savings deposits. Positively, the bank has no exposure to some of troubled cos like airways or media company. Its total exposure to some of the stressed cos is relatively less at...

Cost-to-income ratio improved by 60 BPS q-o-q and 244 BPS y-o-y due to strong topline and other income performance. The bank's strategy of building incremental book in better-rated borrowers (corporate) and granular and higher-yielding book (CV, cards and PL) on the retail and business banking side, with tight control on asset quality is positive for the long term. Stressed pool at 1.67% of total assets has been reducing and is down by...

16 July 2019 controlled provisions (-4% YoY to INR1.9b) and higher other income (+45% YoY). NII stood at INR11.5b (+18% YoY), which, coupled with higher other income, drove 24% YoY growth in total income. NIM shrank 2bp QoQ to 3.15%. Core fee income grew robustly by ~35% YoY to INR2.2b and was well supported by treasury profit of INR0.9b (+86% YoY). Loan growth of 1.6%/18.8% QoQ/YoY was driven by retail + agri loans (+24% YoY), whereas growth across business banking/commercial banking slowed down to 13%/12% YoY. Deposit base grew 19% YoY to INR1.3t, led by term deposits (+23% YoY).

on higher than expected provisions. Bank undertook higher standard asset provisions on specific stressed accounts and also maintained PCR of 50% as slippage of Rs4.3bn came at higher end of trend line, while recovery/upgrades was lower. Bank continues to maintain its credit cost guidance of 60bps & slippages in line with trends with slight risk of one-off a/c in corporate. While...

Federal Bank (FB) reported strong earnings growth led by sharp improvement in asset quality and lower provisions. GNPA improved by 22bps QoQ to 2.9% driven by lower slippages. Credit growth is at 20%, driven by retail, which grew 25%.

Net Interest Income (NII), interest income less interest expense, grew by 17.5% YoY in Q4FY19, supported by consistent 19.8% YoY growth in gross advances, with retail loan growth at 24% YoY. Total deposits increased 21% YoY, with CASA growth at 16% YoY, and CASA ratio marginally declined by 111bps YoY to 32.15%. Provisions reduced by 52.2% YoY aiding a PAT growth of 163.1% YoY while provision coverage ratio improved 296bps sequentially. With improvement in recovery and reduction in slippages, GNPA...

Bank continues to enjoy a strong retail liability franchise with a high share of retail deposits. Healthy traction in fee-based income over the last few quarters mingled with low incremental stress from corporate book should aid overall slippages & augers well for company, going forward. Nonetheless, bank still maintaining cautious stance in growing high-ticket size loans in an unfavorable macro environment & will remain watchful of its Kerala portfolio for any likely volatility in slippages. Moreover, Bank endeavors to continue improvement in return ratios from higher productivity,...