Federal Bank - 3QFY2014 results - Angel Broking

Views of Mr. Vaibhav Agrawal (VP- Research - Banking, Angel Broking) on Federal Bank 3QFY2014 results:

"Federal Bank reported in line operating performance, while asset quality surprised positively. On the operating front, Net Interest Income for the bank increased by 10% yoy, while non-interest income de-grew by 23% yoy, leading to a flattish operating income yoy which was in-line with our estimates. Operating expenses grew 13% yoy, leading to in-line pre-provisioning profit de-growth of 10%. On the asset quality front, the bank reported improvement, as its absolute Gross NPA decreased by 18% sequentially (probably on back of chunky recoveries/upgrades, as witnessed in case of its peer bank; we seek management clarity on this). While the Net NPA decreased by 13% qoq. Provision expenses for bank came in much lower at Rs. 7 cr (probably on back of provisioning reversals due to decline in NPA ratios during 3QFY2014; we await management clarity on this) as compared to Rs. 74 cr in 3QFY2013 which enabled bank to clock earnings growth of 9% yoy. At the CMP, the stock is trading at 0.9x FY2015E ABV. We recommend Accumulate rating on the stock."

Source : Equity Bulls

Keywords