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Sushil Finance
Federal Bank (Hold)
CMP: ₹139.65
Target: ₹156
Federal Bank has reported decent set of numbers for the quarter ended September 2014 with better credit growth and stable asset quality. We attended the conference call of the company and following are the key highlights of the results:
Management Guidance: 1) Expects credit growth of +20 per cent in FY15E with better growth in H2; 2) Non-interest income growth to be 22-25 per cent, 3) Net interest margins to remain stable at 3.2-3.3 per cent, 4) Credit cost for FY15E to be 50-60 bps, 5) Core-fee income likely to improve to 48 per cent.
Focused approach with well-defined strategies has helped bank to be back on growth trajectory after couple of quarters. Revival in advances growth across segment as well as better traction in newer geographies provides better growth visibility. Improving business mix, better cost efficiency coupled with higher focus on core-fee income generation to result in better return ratios going forward. Better visibility of profitable growth along with stable asset quality and improving return ratios instils further confidence.
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