In-line earnings; lower provisions drive earnings beat

Company
17 Jan 2024
5 Min read 
  • Federal Bank reported mixed results with earnings beating estimates due to lower provisions and healthy other income.
  •  Advances and deposits showed healthy growth, with advances growing at 18% YoY and deposits growing at 19% YoY.
  •  Slippages increased, but GNPA/NNPA ratios remained stable at 2.3%/0.6%.
  •  The bank aims to achieve a CD ratio of 80% and 18% growth in its advances portfolio.
  •  The management expects margins to remain under pressure due to increased cost of deposits and plans to focus on delivering a RoA of ~1.4%.
  •  The bank's valuation and view remain positive, with a BUY rating and a target price of INR175.
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