Federal Bank's book and profits improve

Federal Bank is buzzing on excellent Q3FY14 results. The share trading flat at Rs. 81, and has recovered from day’s low of Rs. 79.20. This Kerala headquartered NRI-focused bank with 1,142 branches and 1,312 ATMs, has not only repeated its superb Q2 performance in terms of profitability, but has sharply improved asset quality during the three month ended 31^st December 2013.

While Q3 total income and net interest income is flat QoQ to Rs. 1,896 crore and Rs. 546 crore, the net profit is up 1.8% QoQ to Rs. 230 crore, from Rs. 226 crore in Q2. NIM is strong at 3.24%, thanks to a CASA ratio of 30.35% and also, retail deposits (NRI franchise) accounting for about 93% of the total deposits of Rs. 57,700 crore. RoA maintained at 1.31% during Q3.

Asset quality has improved sharply – Gross NPAs which stood at Rs. 1,554 crore (3.44%) on 31^st March 2013 and Rs. 1,466 crore (3.39%) on 30^th September 2013, is down to Rs. 1,200 crore (2.83%) on 31^st December 2013. Net NPAs have also moderated from Rs. 432 crore (0.98%) on 31^st March 2013 and Rs. 411 crore (0.98%) on 30^th September 2013, is down to Rs. 356 crore (0.86%) on 31^st December 2013. BVPS of Rs. 79.3, indicated that share now trading at PBV of close to 1x and PE of 8.5x.