19.7 C
New York
Sunday, September 25, 2022

Buy now

spot_img

Federal Bank Q1 Review – Strong Growth Trends Aid RoA: Dolat Capital


BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Federal Bank Ltd. reported a good quarter with better than expected net interest income and loan growth of 13%/17% YoY, healthy traction in fee income, contained opex and limited credit costs.

Consequently, core pre-provision operating profit margin improved to 1.7% and return on asset stood at 1.1% for the quarter.

Net interest margin at 3.22% benefitted from moderation in cost of fund to 4.2% and rise in loan-deposit ratio by ~300 basis points QoQ.

However, given that repo linked external benchmark lending rates loans reprice immediately upon rise in rates for the bank, its limited NIM improvement (6 bps QoQ) alludes to very competitive loan pricing.

Gold loans yields (12% of advances) declined by ~60 bps QoQ led by teaser loans. 48% of Federal Bank’s loans are linked to EBLR, including repo and treasury-bill linked loans. We consequently build in slightly lower NIM versus earlier for FY23/24E.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.





Source link

Related Articles

Stay Connected

0FansLike
3,498FollowersFollow
0SubscribersSubscribe
- Advertisement -spot_img

Latest Articles