Result Analysis: Federal bank (CMP: Rs.138) Result Update: Q3FY23

Federal Bank Limited is a major Indian commercial bank in the private sector headquartered in Kerala having more than 1300 branches and 1876 ATMs spread across different States in India. The Bank offers its customers, a variety of services such as Internet banking, Mobile banking, on-line bill payment, online fee collection, depository services, Cash Management Services, merchant banking services, insurance, mutual fund products and many more as part of its strategy to position itself as a financial super market and to enhance customer convenience.

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    Stock Details
    Market Cap. (Cr.) 29278
    Equity (Cr.) 422.95
    Face Value 2
    52 Wk. high/low 142 / 83
    BSE Code 500469
    Book Value (Rs) 95.85
    Sector Banks


    Key Ratios
    ROE (%): 11.00
    TTM EPS: 11.80
    P/BV: 1.40
    TTM P/E: 11.73

    Result Highlights:

    • Federal bank has reported 56.2% YoY and 15% QoQ increase in the consolidated net profit for the December quarter’ 22 to Rs.843.25 cr.

    • For FY23, Net Interest Income of the bank grew by 29.3% YoY and 10.6% QoQ to Rs. 2,113 cr. Net Interest Margin increased by 19 bps on QoQ and 22 bps on YoY basis to 3.49%. (Highest margin ever reported)

    • Banks’s total advances grew to Rs.1.68 lakh cr. by 19.5% YoY in Q3FY23 compared to Rs.1.41 lakh cr. in Q3FY22.

    • Total deposits aggregated to Rs.2.01 lakh cr. as of December 31, 2022, a growth of 14.8% over Rs.1.75 lakh cr. for the same period of FY22 and a growth of around 6.5% over Rs.1.89 lakh cr. as of September 30, 2022.

    • On yearly basis, retail advances grew by 18.13%, commercial advances grew by 18.4%, corporate advances and agri advances grew by 19.13% and 19.70%.

    • CASA deposits grew by 7% YoY to Rs.68,967 cr. with savings account deposits at Rs.55,936 cr. and current account deposits at Rs.13,031 cr.

    • The Bank’s CASA ratio is down sequentially and yearly at 34.24% for Q3FY23 as compared to 36.41% in Q2FY23 and 36.68% of Q3FY22.

    • Asset quality of the bank has improved significantly; Gross NPA has decreased by 68bps to 2.42% and Net NPA ratio decreased by 34bps to 0.77% for the Q3FY23.

    • Bank has added 28 branches and 20 ATMs in the quarter, aggregated to total 1333 branches and 1896 ATMs.

    Financial Performance:


    Shareholding Pattern:

    Particulars %
    Promoters & Promoter Group 0.00
    FIIs 31.95
    DIIs 43.72
    Public 22.67
    Others 1.66

          Key Announcement:

    Commenting on the December quarter results, Mr. Shyam Srinivasan, Managing Director & CEO, said, an all-round strong operating performance has helped us deliver the highest ever quarterly profit of 804Cr. Credit Cost has improved on the back of continued strong asset quality, with GNPA and NNPA at 2.43% and 0.73% respectively. Broad based asset growth of 19%, coupled with core revenue profile has yielded in higher ROA, currently at 1.33%.



    Federal Bank reported strong results in December quarter’22 beating the broader estimates with an all-time high PAT at Rs.843 cr. and Highest ever NII at Rs.2,113 cr. on consolidated basis. Asset quality of the bank has also improved sequentially as well as yearly with GNPA at 2.42% and Net NPA at 0.77%. Overall the long term growth of the bank remains positive with improving asset quality and increasing trend in the income. Federal Bank has delivered the earnings of Rs.10.49 in the last 9 months and we expect the bank to close FY23 at the estimated EPS of Rs.13.99. Based on the expected earnings bank is trading at the PE of 9.86x and we remain positive on the bank with medium to long term target of Rs.200.


    Particulars (In Rs. Cr.) Q3FY23 Q2FY23 Q3FY22 QoQ% YoY% 9M FY23 9MFY22 FY22
    Interest earned 4,698 4,259 3604 10.3% 30.3% 12,800 10,695 14,382
    Interest Expended 2,585 2,349 1970 10.0% 31.2% 7,038 5,929 7,959
    Net Interest Income 2,113 1,910 1634 10.6% 29.3% 5,762 4,766 6,422
    Operating Profit 1,348 1,281 965 5.2% 39.7% 3,668 3,089 3,951
    Provisions 214 284.52 240 -24.9% -10.9% 673 1,221 1,305
    Net Profit after tax 843 733.34 540 15.0% 56.2% 2,211 1,382 1,970
    Deposits 1,89,146 6.5% 14.8% 2,01,408 1,75,432 1,81,700
    Advances 1,61,240 4.3% 19.5% 1,68,173 1,40,743 1,47,639


    Ratios (%) Q3FY23 Q2FY23 Q3FY22 QoQ % YoY%
    Gross NPA 2.42 2.45 3.1 -30 bps -68 bps
    Net NPA 0.77 0.82 1.11 -5 bps -34 bps
    Provision Coverage Ratio 69.19 67.41 65.8 178 bps 339 bps
    Net Interest Margin 3.49 3.3 3.27 19 bps 22 bps
    Capital Adequacy Ratio 13.81 14.3 14.97 -49 bps -116 bps
    CASA Ratio 34.24 36.41 36.68 -217 bps -244 bps
    Source: Company website, EWL Research

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