Federal Bank
1,124 branched Federal Bank presented Q2FY14 total income of Rs. 1,858 crore, flat from Q2’s Rs. 1,869 crore, mainly due to lower trading gains and recoveries to the tune of about Rs. 100 crore sequentially. However, this fall was compensated by 8% QoQ jump in net interest income to Rs. 548 crore and 10% QoQ rise in core other income to Rs. 128 crore. Also, lower provision of barely Rs. 10 crore (versus Rs. 245 crore in Q2) helped augur net profit to Rs. 226 crore in quarter ended 30th September 2013, from Rs. 106 crore, in quarter ended 30th June 2013.
Thus, Q2 and H1FY14 EPS improve to Rs. 2.64 and Rs. 3.88 on each share of face value Rs. 2 each, post stock split from Rs. 10 to Rs. 2 effective 17th October 2013. Due to change in swap accounting policy, bank’s Q2 profit is lower by Rs. 15 crore and H1 profit is lower by Rs. 13 crore. But that does not affect the above results. Its CAR as per Basel III stands at 15.35%.
Although total deposits de-grew marginally from Rs. 56,996 crore to Rs. 56,794 crore during the quarter, low-cost CASA improved to 30.71% from 28.96% as of 30th June 2013, led by strong retail / NRI franchise thanks to its one-in-every-two branches located in Kerala. Advances on the other hand grew 2% QoQ to 42,220 crore. While NIMs improved to 3.30% from 3.13% QoQ, gross NPAs reduced from Rs. 1,483 crore (3.51%) to Rs. 1,466 crore (3.39%), although net NPAs rose marginally from Rs. 374 crore (0.91%) to Rs. 411 crore (0.98%).
With BVPS of Rs. 77, current PBV for the share is 0.92 times, and PE of 7.8 times. Given the strong financial performance in Q2, recent stock split and being a likely takeover candidate with no identifiable promoter and 67% institutional holding, the share will remain in positive territory. It may soon breach Rs. 80 level.