MOSL: FEDERAL BANK (Buy)-Strong beat on all fronts-asset quality showing encouraging trends
​Federal Bank: Strong beat on all fronts; asset quality showing encouraging trends
(FB IN, Mkt Cap USD2.7b, CMP INR107, TP INR125, 16% Upside, Buy)
- Federal Bank’s (FB) 4QFY17 results strongly beat our estimates on all fronts, with higher total income growth (+22% YoY, 8% beat), controlled opex (5% beat) and lower provisions (19% beat). Core PPoP grew 45% YoY (+29% QoQ) to INR4.8b.
- NIM improvement of 10bp QoQ to 3.4%, continued movement in loan growth (+5% QoQ, +26% YoY) and pick-up in fee income growth (+23% YoY) were the key highlights.
- Loan growth of 5% QoQ (+26% YoY) was broad-based across segments, with corporate (+6% QoQ), SME (+8% QoQ) and agri (+11% QoQ) all showing robust growth. Retail loans grew 2% QoQ, but 26% YoY.
- The bank delivered an impressive asset quality performance, with GNPAs declining 12% QoQ in absolute terms (GNPA % down 44bp QoQ to ~2.3%). Incremental slippages moderated to INR2.44b from INR2.73b in 3Q (annualized slippage ratio of ~1.7% – lowest in last eight quarters), led by lower slippages in corporate and retail. Strong recoveries/upgradations and sale to ARC of INR3.18b led to a decline in GNPAs.
Federal Bank is a commercial banking entity based in India. Co. is engaged in offering its customers private and commercial banking, leasing and merchant banking services, through its head office in Aluva and its 422 branches. Co. maintains a full range of delivery channels including, Internet Banking, Mobile Banking and Alerts, Any Where (Branch) Banking, Interconnected Visa enabled ATM network, E-mail Alerts, Telephone Banking and a Centralised customer Call Centre with toll free number. Co. offers its customers 24 hour banking service from various service channels. As of Mar 31 2003, Co.'s total assets and deposits amounted to IRs122,011,685,000 and IRs109,460,167,000, respectively.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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