The private lender, which announced its revenue on Friday, announced a 63.53 percent year-on-year increase (YoY) of Rs 600.66 million, compared to Rs 367.29 million in the same quarter last year.
Interest rates for the quarter increased by 8.14 per cent between years to Rs 3,628.86 million against Rs 3,355.71 million in the same quarter last year. Net interest income (NII) amounted to Rs 1,605 million, compared to Rs 1,418 million.
Stockbrokers expect a 25-45 percent increase in the private lender. The Federal Bank has risen more than 20 percent in the last month, data suggest.
LKP Securities, which is buying shares with a target of 124 rupees, said that the bank’s profit 1QFY23 was in line with expectations, thanks to improved NPAs and strong NII growth contributions for expenses, lending rates and strong asset returns.
However, it pointed to higher declines and lower other revenues due to low Treasury and foreign exchange revenues as the main disappointments. “The bank’s credit quality is under control without much hesitation,” he added.
Allocations and contingencies decreased significantly to Rs 166.68 million from Rs 639.94 million. Gross non-performing assets (GNPA) amounted to 2.69 percent in June 2022, compared to 2.80 percent in the March quarter and 3.50 percent in the quarter last year.
YES Securities are the most bullish on the private lender after first-quarter earnings, with a target price of Rs 142 per share, indicating a 44 percent rise in the table from the previous close.
The media said that the reductions had risen moderately in a row due to reorganized books, according to the guidelines and no change in NIM. “The wholesale segment performed better in a row and growth in core lending was also good.
Another national broker
considers NIM compression and more stress than expected as a key risk for the lender. Despite this, the brokerage has an target price of Rs 125 with a purchase call.
“The Federal Reserve had a yield of over 1 percent for the third quarter in a row,” said ICICI Securities. The lender’s performance shows strong ownership and business acumen.
Lending growth improved behind the successful implementation by management of its new business strategy, which aims to expand new products, with an emphasis on profitability and the synergy effect of fintech partnerships, he added.
The lender’s loan book increased by 16 percent between years to Rs 1.54 trillion, with CV / CE shares increasing by 56 percent, retail sales by 14 percent, car loans increasing by 24 percent and gold loans increasing by 17 percent.
On the other hand, deposits increased by 8 percent between years to Rs 1.83 trillion. Current account deposits (CASA) amounted to ISK 67,540 million and the CASA ratio stands at 36.84 percentage points.
With the headwinds of assets largely behind and to improve careers, Federal Bank is focused on improving its ROA / RoE profile by accelerating growth, improving the mix of higher retail / CV / credit card yields in its portfolio and adjusting Opex, said Axis Securities.
The broker believes in the lender’s valuation and has a purchase on the table with a revised goalkeeper of 125 rupees. “We expect declines to be moderate and should continue to support economic growth,” she added.
Federal Bank once again reported strong revenue as the core of the PPoP was a rhythm led by better lending rates and commission income while operating costs were lower as rising interest rates led to lower pension liabilities, said Prabhudas Lilladher.
“We continue to be optimistic about the Federal Bank, where earnings are expected to be around 20% CAGR above FY22-24E, while credit ratings will remain patient,” he added with a buy rating and target of Rs 135.
Axis investor Rakesh Jhujhunwala owned 7.57,211,060 shares or a 3.7 percent stake in the private lender on March 31, 2022, which is worth more than 770 rupees. Its share has remained unchanged for the last three quarters.
However, the Bank has not announced its holdings in the quarter ended June 30, 2022. Listed companies are required to publish the list of key shareholders on a quarterly basis according to Sebi criteria.
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