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N I I a b o v e e s t i m a t e s , m a r g i n s u p b e a t …
Federal Bank reported stellar NII growth of 18.1% YoY and 11.3% QoQ to
| 528 crore (I-direct estimate: | 490 crore) backed by strong NIM of
3.94%. Non-interest income witnessed 17.9% QoQ growth to | 138 crore
boosted by 46.9% QoQ jump in forex income to | 27.7 crore. Operating
expenses grew 16.5% YoY to | 247 crore as C/I ratio remains stable at
37%. Asset quality remains a concern with GNPA ratio rising to 4%.
ƒ Credit growth revised from 19% to 16% for FY12E
We are revising credit growth estimate for FY12E to 16% as the
bank is expected to grow in line with industry. Credit growth dipped
1.2% sequentially in Q3FY12 to | 33206 crore (17.6% YoY growth)
as corporate book witnessed 2.9% QoQ de-growth | 14571 crore.
ƒ NIM surprises positively in Q3FY12, guided lower for FY13E
Base rate hikes, higher retail mix in portfolio and running down of
high cost bulk deposit helped the bank to improve NIM by 17 bps
sequentially to 3.9% in Q3FY12. YoA rose 17 bps QoQ to 12.9%
while CoD rose 13 bps QoQ to 7.6%. We expect the full impact of
NRE rate hikes to creep in from coming quarters, which will cause
the CoD to rise, thereby keeping NIM under pressure. Management
has guided NIM of ~3.8% for FY12E and ~3.6 for FY13E.
ƒ NPAs increase sequentially…
The GNPA surged 9% QoQ in absolute terms to | 1363.4 crore while
advances slipped 1.2% QoQ, thereby causing a sharp uptick in
GNPA ratio to 4%, up by 36 bps sequentially. NNPA ratio came at
0.7% with PCR of 80.5%. Slippages for the quarter were high at |
330 crore as this time around corporate portfolio deteriorated with |
193 crore slippages. Retail and SME slippage we lower at | 46 crore
and | 91 crore, respectively. Restructured book remained stable at |
1438 crore QoQ with expected pipeline of aviation (exposure of |
400 crore) and Haryana SEB (exposure of | 480 crore) restructuring.
V a l u a t i o n
Stronger margins, higher RoA and improving RoE remain the key
positives for the bank. We maintain target at | 472 at 1.5x FY13E ABV
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
N I I a b o v e e s t i m a t e s , m a r g i n s u p b e a t …
Federal Bank reported stellar NII growth of 18.1% YoY and 11.3% QoQ to
| 528 crore (I-direct estimate: | 490 crore) backed by strong NIM of
3.94%. Non-interest income witnessed 17.9% QoQ growth to | 138 crore
boosted by 46.9% QoQ jump in forex income to | 27.7 crore. Operating
expenses grew 16.5% YoY to | 247 crore as C/I ratio remains stable at
37%. Asset quality remains a concern with GNPA ratio rising to 4%.
ƒ Credit growth revised from 19% to 16% for FY12E
We are revising credit growth estimate for FY12E to 16% as the
bank is expected to grow in line with industry. Credit growth dipped
1.2% sequentially in Q3FY12 to | 33206 crore (17.6% YoY growth)
as corporate book witnessed 2.9% QoQ de-growth | 14571 crore.
ƒ NIM surprises positively in Q3FY12, guided lower for FY13E
Base rate hikes, higher retail mix in portfolio and running down of
high cost bulk deposit helped the bank to improve NIM by 17 bps
sequentially to 3.9% in Q3FY12. YoA rose 17 bps QoQ to 12.9%
while CoD rose 13 bps QoQ to 7.6%. We expect the full impact of
NRE rate hikes to creep in from coming quarters, which will cause
the CoD to rise, thereby keeping NIM under pressure. Management
has guided NIM of ~3.8% for FY12E and ~3.6 for FY13E.
ƒ NPAs increase sequentially…
The GNPA surged 9% QoQ in absolute terms to | 1363.4 crore while
advances slipped 1.2% QoQ, thereby causing a sharp uptick in
GNPA ratio to 4%, up by 36 bps sequentially. NNPA ratio came at
0.7% with PCR of 80.5%. Slippages for the quarter were high at |
330 crore as this time around corporate portfolio deteriorated with |
193 crore slippages. Retail and SME slippage we lower at | 46 crore
and | 91 crore, respectively. Restructured book remained stable at |
1438 crore QoQ with expected pipeline of aviation (exposure of |
400 crore) and Haryana SEB (exposure of | 480 crore) restructuring.
V a l u a t i o n
Stronger margins, higher RoA and improving RoE remain the key
positives for the bank. We maintain target at | 472 at 1.5x FY13E ABV
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