Federal Bank Q1 Results Review - Earnings Inline; Margin Contracts Further: Motilal Oswal

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .Motilal Oswal Report.Federal Bank Ltd. posted a mixed quarter, with inline profit after tax and lower-than-expected net interest income. Profit after tax grew 42% YoY to Rs 8.5 billion, aided by high other income (28% beat). The NII miss was due to a 16 basis point fall in NIM to 3.15%. The provision coverage ratio was stable at ~71%.Gross advances grew 21% YoY, driven by a broad-based pickup in all business segments. Deposit growth too was healthy, aided by strong traction in term deposits. Thus, the current account and savings account ratio moderated to 31.9%.Slippages came in at Rs 4.9 billion, led by a 77.6% QoQ increase in the retail segment. Gross/net non-performing asset ratios remained stable at 2.38%/0.69%, while restructured loans improved ~22 bp QoQ to ~1.4%.Federal Bank reported return on asset/return on equity of 1.3%/15.7% in Q1 FY24. We broadly maintain our estimates as controlled credit costs and healthy other income compensated for higher opex. We estimate Federal Bank to deliver RoA/RoE of 1.3%/15.8% in FY25. We reiterate our 'Buy' rating on the stock..Click on the attachment to read the full report:.Federal Bank Q1 Results Review- Net Interest Margin Trajectory Remains Key; Maintain Accumulate: Dolat Capital.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Federal Bank Q1 Results Review - Earnings Inline; Margin Contracts Further: Motilal Oswal

Net interest margin guidance remains stable at 3.3% for FY24.

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