Federal Bank, 1Q FY 2014

7/27/2019 Federal Bank, 1Q FY 2014

1/11

Please refer to important disclosures at the end of this report 1

Particulars (` cr) 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy)NII 510 480 6.2 492 3.7Pre-prov. profit 401 369 8.4 347 15.6

PAT 106 222 (52.4) 190 (44.5)Source: Company, Angel Research

Federal Bank announced a weak set of numbers for 1QFY2014, with a muted NII

growth of 3.7% yoy. Non-interest income grew at 73.6% yoy primarily boosted by

treasury gains and helped the bank to achieve a pre-provisioning profit growth of

15.6% yoy. Provisioning expense grew by 290% yoy (as the bank increased NAFED

provisioning to 100%), which resulted in earnings de-growth of 44.5% yoy.NIMs improve sequentially; Asset quality pressures persist: During 1QFY2014, thebank witnessed moderate growth in its balance sheet, as its advances grew by

8.5% yoy, while deposits grew by 12.7% yoy. Within advances, Retail and SME

book registered a healthy growth of 21.0% and 19.9% yoy, respectively, while

corporate book de-grew by 6.0% yoy. CASA ratio came in higher by 202bp

sequentially and 60bp yoy to 29.0%. NIMs improved by 6bp qoq to 3.13%, aided

by a 21bp sequential fall in cost of deposits to 7.4%. Boosted by treasury gains,

the overall non-interest income for the bank grew by 73.6% yoy to `216cr.

Treasury income came in at `89cr compared to `26cr in 1QFY2013. Non-interest

income (excluding treasury) grew strongly by 29.3% yoy to `127cr. During the

quarter, the annualized slippage rate came in elevated at 2.8%, though lower

than 3.8% in previous quarter. As of 1QFY2014, the Gross NPA ratio stands at3.5% (3.4% in 4QFY2013), while the net NPA ratio stands at 0.9% (1.0% in

4QFY2013). The PCR (including technical write-offs) improved ~200bp

sequentially to 83.0%. The bank restructured advances worth `76cr during the

quarter. Going forward, the Management guided that few large ticket advances

worth `300-400cr could slip into NPAs over the next few quarters, while the

restructuring pipeline for the bank stands at ~ `150-180cr.

Outlook and valuation: Though the Management has taken various steps tostabilize its asset-quality woes, but given the weakening economic environment

and the recent macro-economic developments, the pace of improvement in asset

quality is expected to be slower than earlier anticipated. Moreover, the banks

gold loan portfolio accounts for ~15% of the overall loan book. As per the

Management, ~10-15% of its gold loan book has a loan-to-value (LTV) of morethan 90%, which could pose asset quality challenges if there is a significant

correction in gold prices here on. At CMP, the stock trades at 0.9x FY2015E ABV.We recommend a Neutral rating on the stock.Key financialsY/E March (` cr) FY2012 FY2013 FY2014E FY2015ENII 1,953 1,975 2,182 2,563% chg 11.8 1.1 10.5 17.5

Net profit 777 838 651 888% chg 32.3 7.9 (22.3) 36.4

NIM (%) 3.6 3.1 3.0 3.0

EPS (`) 45.4 49.0 38.1 51.9P/E (x) 8.4 7.8 10.0 7.3P/ABV (x) 1.1 1.0 0.9 0.9

RoA (%) 1.4 1.3 0.9 1.0

RoE (%) 14.4 13.9 9.8 12.3Source: Company, Angel Research, CMP as of July 22, 2013

NEUTRALCMP `381Target Price -

Investment Period -

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters -

MF / Banks / Indian Fls 20.9

FII / NRIs / OCBs 46.3

Indian Public / Others 32.8

Abs. (%) 3m 1yr 3yr

Sensex 5.2 17.5 11.3

Federal Bank (17.9) (8.4) 7.0

Face Value (`)

BSE Sensex

Nifty

Reuters Code

6,519

551/362

68,305

Banking

Avg. Daily Volume

Market Cap (`cr)

Beta

52 Week High / Low

1.1

10

20,159

6,032

FED.BO

FB@IN

Vaibhav Agrawal022 3935 7800 Ext: 6808

[email protected]

Sourabh Taparia022 3935 7800 Ext: [email protected]

Harshal Patkar022 3935 7800 Ext: 6847

[email protected]

Federal BankPerformance Highlights

1QFY2014 Result Update | Banking

July 24, 2013


2/11

Federal Bank | 1QFY2014 Result Update

July 24, 2013 2

Exhibit 1:1QFY2014 performanceParticulars (` cr) 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy) FY2013 FY2012 % chg (qoq)Interest earned 1,653 1,583 4.4 1,537 7.6 4,584 4,079 12.4- on Advances / Bills 1,242 1,168 6.3 1,163 6.8 3,467 3,111 11.4- on investments 397 397 0.0 355 11.8 1,068 937 13.9

- on balance with RBI & others 13 15 (14.0) 17 (20.8) 41 22 85.9

- on others 1 3 (65.3) 2 (39.7) 8 9 18.0

Interest Expended 1,144 1,104 3.6 1,045 9.4 3,089 2,617 18.0Net Interest Income 510 480 6.2 492 3.7 1,495 1,462 2.2Other income 216 197 9.6 124 73.6 468 372 25.8- Other income excl. treasury 127 139 (9.0) 98 29.3 319 326 (2.0)

- Treasury Income 89 58 54.6 26 239.2 148 46 224.1

Operating income 725 677 7.2 616 17.8 1,962 1,834 7.0Operating expenses 325 307 5.8 269 20.6 872 700 24.6- Employee expenses 174 151 14.8 152 13.9 475 398 19.5

- Other Opex 151 156 (3.0) 117 29.3 397 302 31.4

Pre-provision Profit 401 369 8.4 347 15.6 1,090 1,134 (3.9)Provisions & Contingencies 245 98 149.6 63 290.4 168 321 (47.9)- Provisions for NPAs 239 91 162.4 76 215.3 133 263 (49.5)

- Provisions for Investments (3) 7 NA (21) NA (44) 45 NA

- Other Provisions 9 0 7,366.7 7 21.2 78 13 503.6

PBT 155 271 (42.7) 284 (45.2) 922 813 13.5Provision for Tax 50 49 0.9 93 (46.7) 306 273 12.0PAT 106 222 (52.4) 190 (44.5) 616 539 14.3Effective Tax Rate (%) 32.0 18.2 1383bp 32.9 (89)bp 33.2 33.6 (45)bp

Source: Company, Angel Research

Exhibit 2:1QFY2014 Actual vs Angel estimatesParticulars (` cr) Actual Estimates Var. (%)Net interest income 510 502 1.5

Non-interest income 216 139 55.3

Operating income 725 641 13.2Operating expenses 325 319 1.9

Pre-prov. profit 401 322 24.3Provisions & cont. 245 48 409.6

PBT 155 274 (43.3)

Prov. for taxes 50 82 (39.5)

PAT 106 192 (44.9)Source: Company, Angel Research


3/11


July 24, 2013 3

Exhibit 3:1QFY14 performanceParticulars 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy)Balance sheetAdvances (` cr) 41,263 44,097 (6.4) 38,043 8.5Deposits (`cr) 56,996 57,615 (1.1) 50,558 12.7

Credit-to-Deposit Ratio (%) 72.4 76.5 (414)bp 75.2 (285)bp

Current deposits (`cr) 2,692 2,776 (3.0) 2,358 14.2

Saving deposits (` cr) 13,811 12,743 8.4 11,977 15.3

CASA deposits (`cr) 16,503 15,519 6.3 14,335 15.1

CASA ratio (%) 29.0 26.9 202bp 28.35 60bp

CAR (%) 15.0 14.7 27bp 15.5 (45)bp

Tier 1 CAR (%) 14.4 14.1 28bp 14.7 (33)bp

Profitability Ratios (%)Cost of deposits 7.4 7.6 (21)bp 7.6 (17)bp

Yield on advances 11.9 11.8 9bp 12.5 (64)bp

Yield on investments 8.7 8.3 41bp 7.8 89bp

Reported NIM 3.1 3.1 6bp 3.4 (29)bp

Cost-to-income ratio 42.1 45.4 (330)bp 43.7 (166)bp

Asset qualityGross NPAs (`cr) 1,483 1,554 (4.6) 1,409 5.3

Gross NPAs (%) 3.5 3.4 7bp 3.6 (9)bp

Net NPAs (` cr) 374 432 (13.5) 236 58.2

Net NPAs (%) 0.9 1.0 (7)bp 0.6 29bp

Provision Coverage Ratio (%) 83.0 81.0 204bp 80.2 277bp

Slippage ratio (%) 2.8 3.8 (102)bp 3.1 (30)bp

NPA to avg. assets (%) 1.3 0.1 122bp 0.5 85bp


Balance sheet growth moderates; NIMs improve sequentially

During 1QFY2014, the bank witnessed moderate growth in its balance sheet, as

its advances grew by 8.5% yoy, while deposits grew by 12.7% yoy.Within

advances, Retail and SME book registered a healthy growth of 21.0% and 19.9%

yoy, respectively, while the corporate bookde-grew by 6.0% yoy. Post the recent

volatility in gold prices, the bank cautiously de-grew its gold loan portfolio

sequentially by 6.2% during the quarter. The banks gold loan portfolio accounts

for ~15% of the overall loan book. On its gold loan book, the average LTV

(including accrued interest and post the recent correction in gold prices) stands at

~75-77% (as compared to origination LTV of ~60%). As per the Management,

~10-15% of its gold loan book has a LTV of more than 90%

Going forward, the Management has guided for corporate loan growth of 10%

plus, on back of disbursals out of sanctions already in place, while the guidance

for Retail & SME loan growth is 20% plus.

On the deposits front, the bank witnessed a healthy growth of 14.2% yoy in current

deposits, while growth in savings deposits was healthy at 15.3% yoy.Consequently, overall CASA deposits registered a healthy growth of 15.1% and

CASA ratio as of 1QFY2014 stood at 29.0%, which was higher by 202bp

sequentially and 60bp on a yoy basis.


4/11


July 24, 2013 4

Exhibit 4:Advances and deposit growthslows down


Exhibit 5:CASA ratio rises qoq and yoy


During 1QFY2014, the yields on advances and investments improved sequentially

by 9bp and 41bp, to 11.8% and 8.7%. On the other hand the cost of deposits

decreased sequentially by 21bp to 7.4%. Consequently, NIMs improved by 6bp

qoq to 3.13%. Going forward, the Management has guided for the NIM to remain

in the range of 3.13-3.2% for 2QFY2014.

Exhibit 6:Cost of deposits lower sequentially by 21bp ...


Exhibit 7:...aiding a 6bp qoq improvement in NIM


Non-interest income (excluding treasury) grows strongly;Treasury income propels overall non-interest income

Boosted by treasury gains, the overall non-interest income for the bank grew by

73.6% yoy to `216cr. Treasury income came in at `89cr compared to `26cr in

1QFY2013. Non-interest income (excluding treasury) grew strongly by 29.3% yoy

to `127cr. Recoveries from written-off account came in higher at `10cr as

compared to `7cr in 1QFY2013.

Asset quality pressure persists

During the quarter, the banks witnessed slippages of `304cr (retail `52cr, SMEand Agri - `71cr, and corporate `181cr). The annualized slippage rate remained

elevated at 2.8%, though lower from 3.8% in the previous quarter. Gross NPA ratio

as of 1QFY2014 stands at 3.5% (3.4% in 4QFY2013), while the net NPA ratio

19.0

8.0

18.9

16.8

8.5

17.8

4.8

10.4

17.7

12.7

75.2

73.3

76.5

76.5

72.4

70.0

72.0

74.0

76.0

78.0

-

5.0

10.0

15.0

20.0

1QFY13 2QFY13 3QFY13 4QFY13 1QFY14

Adv. yoy chg (% ) Dep. yoy chg (%) CDR (%, RHS)

28.4 28.729.5

26.9

29.0

20.0

22.0

24.0

26.0

28.0

30.0


(%)

7.55 7.61 7.64 7.597.38

6

6.5

7

7.5

8


(%)

3.42

3.58

3.47

3.073.13

2.60

2.80

3.00

3.20

3.40

3.60

1 QF Y1 3 2 QF Y1 3 3 QF Y1 3 4 QF Y1 3 1 QF Y1 4

(%)


5/11


July 24, 2013 5

stands at 0.9% (1.0% in 4QFY2013).PCR (incl. technical write-offs) for the bank

improved ~200bp sequentially to 83.0%. The bank restructured advances worth

`76cr during the quarter taking the total outstanding restructured book to `2,500cr

(`

1,955cr of standard restructured assets).

The bank has `200cr exposure to NAFED, the provisioning on which was raised

from 50% to100% during the quarter. Going forward, the Management guided

that a few large ticket advances worth `300-400cr could slip into NPA category in

the next few quarters, while the restructuring pipeline for the bank stands at

~`150-180cr.

Exhibit 8:Trends in Gross and Net NPA levels


Exhibit 9:Credit cost spikes on NAFED provisioning


Exhibit 10:Opex trend


Exhibit 11:Opex-to-avg. assets trend


1,4

09

1,4

35

1,5

64

1,5

54

1,4

83

236

245

362

432

374

80.2 80.0

74.5

81.083.0

60.0

70.0

80.0

90.0

-

300

600

900

1,200

1,500

1,800


Gross NPAs (` cr) Net NPAs (` cr) PCR (%, RHS)

0.5

0.10.2

0.5

1.3

-

0.2

0.4

0.6

0.8

1.0

1.21.4

1.6


(%)

152

159

163

151

174

117

136

144

156

132

43.7

45.8

43.8

45.4

42.1

40.0

41.0

42.0

43.0

44.0

45.0

46.0

47.0

-

100

200

300

400


Staff exps (` cr) Other opex (` cr) CIR (%, RHS)

1.7

1.92.0

1.8

1.7

1.5

1.6

1.7

1.8

1.9

2.0


(%)


6/11


July 24, 2013 6

Investment arguments

Asset quality remains under pressure

Over the past few years, the bank has witnessed elevated slippages (annualizedslippage rate of above 3%) almost every quarter, largely emanating from negative

surprises in its Corporate and SME & Agri books. Though the Management has

taken various steps to stabilize its asset-quality woes, but given the weakening

economic environment and the recent macro-economic developments, the pace of

improvement in asset quality is expected to be slower than earlier anticipated.

Moreover, the banks gold loan portfolio accounts for ~15% of the overall loan

book. As per the Management, ~10-15% of its gold loan book has a LTV of more

than 90%, which could pose asset quality challenges if there is a significant

correction in gold prices here on.

Outlook and valuationThough the bank has now slightly moderated its network expansion plans, over the

last two years, the bank has grown its branch network at a CAGR of 21.8%, which

has not only aided the bank to increase its low cost deposit profile (CASA ratio has

reached 29.0% as of 1QFY2014 from 26.3% as of FY2011), but has also laid a

platform for building a sustainable retail asset book. Though the Management has

taken various steps to stabilize its asset-quality woes, but given the weakening

economic environment and the recent macro-economic developments, the pace of

improvement in asset quality is expected to be slower than earlier anticipated.

Moreover, the banks gold loan portfolio accounts for ~15% of the overall loan

book. As per the Management, ~10-15% of its gold loan book has a LTV of more

than 90%, which could pose asset quality challenges if there is a significant

correction in gold prices here on. At the current market price, the stock trades at

0.8x of FY2015E ABV. We recommend a Neutral rating on the stock.Exhibit 12:Key assumptionsParticulars (%) Earlier estimates Revised estimatesFY2014 FY2015 FY2014 FY2015Credit growth 23.0 20.0 18.0 20.0

Deposit growth 18.0 20.0 15.0 20.0

CASA ratio 26.2 25.1 27.1 25.9

NIMs 2.9 2.9 3.0 3.0

Other income growth (7.0) 15.4 (7.2) 11.4

Growth in staff expenses 15.0 15.0 15.0 15.0

Growth in other expenses 15.0 15.0 15.0 15.0

Slippages 2.3 2.0 2.8 2.0

Coverage ratio 76.0 75.2 83.1 82.1

Source: Angel Research


7/11


July 24, 2013 7

Exhibit 13:Change in estimatesParticulars (` cr)

FY2014 FY2015Earlierestimates Revisedestimates Var. (%) Earlierestimates Revisedestimates Var. (%)

NII 2,184 2,182 (0.1) 2,562 2,563 0.1

Non-interest income 617 617 (0.1) 713 687 (3.7)

Operating income 2,802 2,798 (0.1) 3,275 3,250 (0.8)Operating expenses 1,356 1,356 - 1,560 1,560 -

Pre-prov. profit 1,445 1,442 (0.2) 1,715 1,690 (1.4)Provisions & cont. 229 538 134.9 248 345 39.2

PBT 1,216 904 (25.7) 1,467 1,345 (8.3)

Prov. for taxes 365 253 (30.6) 499 457 (8.3)

PAT 851 651 (23.5) 968 888 (8.3)Source: Angel Research

Exhibit 14:P/ABV band


0100

200

300

400

500

600

700

800

Mar-06

Oct-06

May-0

7

Dec-0

7

Jul-08

Feb-0

9

Sep-0

9

Apr-10

Nov-1

0

Jun-1

1

Jan-1

2

Aug-1

2

Mar-13

Oct-13

Price (`) 0.3x 0.6x 0.9x 1.2x 1.5x


8/11


July 24, 2013 8

Exhibit 15:Recommendation summaryCompany Reco. CMP(`) Tgt.price (`) Upside(%) FY2015EP/ABV (x) FY2015E Tgt.P/ABV (x) FY2015EP/E (x) FY13E-15E EPSCAGR (%) FY2015ERoA (%) FY2015ERoE (%)AxisBk Buy 1,200 1,441 20 1.3 1.6 7.6 19.1 1.6 18.1

FedBk Neutral 381 - - 0.9 - 7.3 2.9 1.0 12.3HDFCBk Accumulate 682 745 9 3.2 3.5 15.1 26.3 1.9 22.8

ICICIBk* Buy 975 1,160 19 1.4 1.7 9.8 17.4 1.6 16.2

SIB Neutral 23 - - 0.9 - 5.5 5.7 0.9 16.2

YesBk Neutral 424 - - 1.8 - 8.5 17.1 1.3 22.8

AllBk Accumulate 85 95 12 0.4 0.4 2.6 18.3 0.7 13.6

AndhBk Neutral 79 - - 0.5 - 3.4 (0.3) 0.7 13.2

BOB Accumulate 587 642 9 0.6 0.7 4.1 16.8 0.9 16.0

BOI Accumulate 212 236 12 0.5 0.5 3.1 21.6 0.7 15.1

BOM Accumulate 49 54 9 0.5 0.6 3.8 10.0 0.6 15.3

CanBk Neutral 320 - - 0.5 - 3.7 15.4 0.8 14.2CentBk Neutral 64 - - 0.6 - 3.4 52.3 0.6 14.3

CorpBk Accumulate 330 360 9 0.4 0.5 3.1 5.7 0.7 14.2

DenaBk Neutral 67 - - 0.4 - 2.7 3.7 0.7 14.7

IDBI# Neutral 71 - - 0.4 - 3.2 25.1 0.8 13.3

IndBk Accumulate 107 113 5 0.4 0.4 2.6 7.0 0.9 14.7

IOB Neutral 48 - - 0.3 - 2.4 78.9 0.6 13.0

J&KBk Neutral 1,257 - - 1.0 - 6.0 (1.7) 1.2 16.8

OBC Buy 174 203 17 0.4 0.4 2.8 17.0 0.8 12.9

PNB Accumulate 646 718 11 0.6 0.7 3.7 14.5 1.1 16.5

SBI* Accumulate 1,824 2,077 14 1.0 1.2 6.4 17.5 1.0 17.0

SynBk Accumulate 112 121 7 0.6 0.6 4.0 (8.5) 0.6 14.6

UcoBk Reduce 69 63 (8) 0.7 0.7 4.4 67.5 0.6 13.6

UnionBk Accumulate 156 178 15 0.5 0.6 3.3 14.7 0.7 15.2

UtdBk Neutral 46 - - 0.3 - 2.3 54.6 0.6 14.7

VijBk Accumulate 45 47 5 0.5 0.5 4.1 9.5 0.4 11.5

Source: Company, Angel Research; Note: *Target multiples=SOTP target price/ABV (including subsidiaries); #Without adjusting for SASF


9/11


July 24, 2013 9

Income statementY/E March (` cr) FY09 FY10 FY11 FY12 FY13 FY14E FY15ENII 1,315 1,411 1,747 1,953 1,975 2,182 2,563- YoY growth (%) 51.5 7.3 23.8 11.8 1.1 10.5 17.5Other income 516 531 517 532 664 617 687- YoY growth (%) 30.6 2.9 (2.7) 3.0 24.8 (7.2) 11.4

Operating income 1,831 1,942 2,263 2,486 2,639 2,798 3,250- YoY growth (%) 45.0 6.0 16.6 9.8 6.2 6.0 16.1

Operating expenses 571 677 836 979 1,180 1,356 1,560- YoY growth (%) 21.9 18.5 23.5 17.1 20.5 15.0 15.0

Pre-prov. profit 1,260 1,265 1,427 1,506 1,460 1,442 1,690- YoY growth (%) 58.6 0.4 12.8 5.6 (3.1) (1.2) 17.2

Prov. & cont. 467 405 525 337 266 538 345- YoY growth (%) 58.8 (13.2) 29.6 (35.9) (21.1) 102.4 (35.8)

PBT 793 860 902 1,170 1,194 904 1,345- YoY growth (%) 58.6 8.4 4.9 29.7 2.1 (24.3) 48.8

Prov. for taxation 293 395 315 393 356 253 457- as a % of PBT 36.9 46.0 34.9 33.6 29.8 28.0 34.0

PAT 500 465 587 777 838 651 888- YoY growth (%) 36.0 (7.2) 26.4 32.3 7.9 (22.3) 36.4

Balance sheetY/E March (` cr) FY09 FY10 FY11 FY12 FY13 FY14E FY15EShare Capital 171 171 171 171 171 171 171Reserves & Surplus 4,155 4,519 4,938 5,535 6,194 6,705 7,394

Deposits 32,198 36,058 43,015 48,937 57,615 66,257 79,509

- Growth (%) 24.3 12.0 19.3 13.8 17.7 15.0 20.0

Borrowings 749 1,227 1,582 3,935 4,957 5,240 6,234

Tier 2 Capital 470 320 306 306 230 224 219

Other Liab. & Prov. 1,108 1,380 1,445 1,742 1,883 2,302 2,730

Total Liabilities 38,851 43,676 51,456 60,627 71,050 80,900 96,257Cash Balances 2,214 2,319 2,935 2,424 2,743 2,982 3,578

Bank Balances 1,223 405 813 1,108 977 1,213 1,444

Investments 12,119 13,055 14,538 17,402 21,155 22,318 26,011Advances 22,392 26,950 31,953 37,756 44,097 52,034 62,441

- Growth (%) 18.4 20.4 18.6 18.2 16.8 18.0 20.0

Fixed Assets 281 290 290 326 397 439 507

Other Assets 622 658 927 1,610 1,681 1,914 2,277

Total Assets 38,851 43,676 51,456 60,627 71,050 80,900 96,257- Growth (%) 19.5 12.4 17.8 17.8 17.2 13.9 19.0


10/11


July 24, 2013 10

Ratio analysisY/E March FY09 FY10 FY11 FY12 FY13 FY14E FY15EProfitability ratios (%)NIMs 3.8 3.5 3.8 3.6 3.1 3.0 3.0Cost to Income Ratio 31.2 34.9 36.9 39.4 44.7 48.5 48.0

RoA 1.4 1.1 1.2 1.4 1.3 0.9 1.0

RoE 12.2 10.3 12.0 14.4 13.9 9.8 12.3

B/S ratios (%)CASA Ratio 24.5 26.2 26.9 27.5 27.2 27.1 25.9

Credit/Deposit Ratio 69.5 74.7 74.3 77.2 76.5 78.5 78.5

CAR 20.2 18.4 16.8 16.6 14.7 14.0 13.0

- Tier I 18.4 16.9 15.6 15.9 14.1 13.4 12.4

Asset Quality (%)Gross NPAs 2.6 3.0 3.5 3.3 3.4 3.0 2.5

Net NPAs 0.3 0.5 0.6 0.5 1.0 0.5 0.5

Slippages 3.0 3.3 3.2 2.1 2.1 2.8 2.0

Loan Loss Prov./Avg.Assets

1.0 1.0 1.0 0.4 0.3 0.7 0.3

Provision Coverage 88.4 84.3 83.4 84.7 72.2 83.1 82.1

Per Share Data (`)EPS 29.3 27.2 34.3 45.4 49.0 38.1 51.9

ABVPS 252.6 273.9 298.3 333.3 369.2 401.7 442.0

DPS 5.0 5.0 8.5 9.0 9.0 7.0 10.0

Valuation RatiosPER (x) 13.0 14.0 11.1 8.4 7.8 10.0 7.3

P/ABVPS (x) 1.5 1.4 1.3 1.1 1.0 0.9 0.9

Dividend Yield 1.3 1.3 2.2 2.4 2.4 1.8 2.6

DuPont Analysis (%)NII 3.7 3.4 3.7 3.5 3.0 2.9 2.9

(-) Prov. Exp. 1.3 1.0 1.1 0.6 0.4 0.7 0.4

Adj. NII 2.4 2.4 2.6 2.9 2.6 2.2 2.5

Treasury 0.2 0.3 0.1 0.1 0.3 0.1 0.1

Int. Sens. Inc. 2.6 2.7 2.7 3.0 2.9 2.3 2.6

Other Inc. 1.2 1.0 1.0 0.8 0.7 0.7 0.7

Op. Inc. 3.8 3.7 3.7 3.8 3.6 3.0 3.3

Opex 1.6 1.6 1.8 1.7 1.8 1.8 1.8

PBT 2.2 2.1 1.9 2.1 1.8 1.2 1.5

Taxes 0.8 1.0 0.7 0.7 0.5 0.3 0.5

RoA 1.4 1.1 1.2 1.4 1.3 0.9 1.0Leverage (x) 8.7 9.2 9.7 10.4 10.9 11.5 12.3

RoE 12.2 10.3 12.0 14.4 13.9 9.8 12.3


11/11


July 24, 2013 11

Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

DISCLAIMERThis document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investmentdecision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document shouldmake such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of thecompanies referred to in this document (including the merits and risks involved), and should consult their own advisors to determinethe merits and risks of such an investment.

Angel Broking Pvt. Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, makeinvestment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in thisdocument are those of the analyst, and the company may or may not subscribe to all the views expressed within.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions andtrading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company'sfundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliablesources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as thisdocument is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any wayresponsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannottestify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.While Angel Broking Pvt. Limited endeavours to update on a reasonable basis the information discussed in this material, there may beregulatory, compliance, or other reasons that prevent us from doing so.

This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,redistributed or passed on, directly or indirectly.

Angel Broking Pvt. Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment bankingor other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report orin the past.

Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise fromor in connection with the use of this information.

Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to thelatest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Limited and its affiliates mayhave investment positions in the stocks recommended in this report.

Disclosure of Interest Statement Federal Bank

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to 15%) Sell (< -15%)

Note: We have not considered any Exposure below`

1 lakh for Angel, its Group companies and Directors

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Federal Bank, 1Q FY 2014

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