Federal Bank - Q1FY22 First Cut - ICICI Direct

(CMP - Rs. 85, MCap - Rs. 17039 crore)

Relatively better show on operating and asset quality.

Q1FY22 Earnings Summary

- Federal Bank has posted mixed results with net interest income remaining flattish QoQ to Rs. 1418 crore, as NIMs declined 8 bps sequentially to 3.15%. Non-interest income saw healthy growth of 39.7% QoQ and 33.1% YoY led by sharp rise in treasury income from Rs. 59 crore to Rs. 258 crore QoQ and recoveries & other income of Rs. 137 crore versus Rs. 44 crore in the previous quarter

- Opex declined 6.7% QoQ due to subdued business activity and as a result C/I ratio was down sharply from 53.1% to 45.1% sequentially. Total provisions jumped 62.6% YoY to Rs. 642 crore as a result of higher stress formation and as a result net profit for the quarter came in at Rs. 367 crore (below our estimate), down 8% YoY

- Overall asset quality deteriorated as GNPA and NNPA increased sequentially by 16 bps and 10 bps to 3.51% and 1.28%, though better relative to peers. Slippages for the quarter stood at Rs. 640 crore while recoveries and write-offs stood at Rs. 203 crore and Rs. 439 crore. Slippages increased in Business Banking (MSME) segment from Rs. 74 crore to Rs. 169 crore and Agri segment from Rs. 89 crore to Rs. 157 crore. Restructured book increased from Rs. 1917 crore to Rs. 2915 crore QoQ and now forms 2.3% of net advances versus 1.5% QoQ

- Business traction was muted on a sequential basis as loan book declined marginally during the quarter by 1.6% to Rs. 1.29 lakh crore. This was mainly on account of QoQ de-growth all segments except agri which was up 5% QoQ . On deposit front, the growth stood at 9.3% YoY to Rs. 1.69 lakh crore, in which CASA was up 19% YoY; as a result CASA ratio improved from 32.02% versus 34.8% YoY

Shares of FEDERAL BANK LTD. was last trading in BSE at Rs. 85.4 as compared to the previous close of Rs. 84.25. The total number of shares traded during the day was 6929845 in over 6094 trades.

The stock hit an intraday high of Rs. 87 and intraday low of 83.75. The net turnover during the day was Rs. 585456300.

Source : Equity Bulls

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