Federal Bank Ltd. reported a 14% increase in profitability for the the September quarter, outperforming expectations. This surge was primarily driven by robust 'other income' and lower provisions. The bank's net interest income met expectations, with margins improving to 3.16%.
The bank also reported strong advances and deposit growth at 21% YoY/5% QoQ and 23% YoY/4.7% QoQ, respectively. This growth was supported by term deposits and the expansion of retail and commercial banking, leading to a CASA ratio of 31.2%.
Federal Bank saw a reduction in slippages to Rs 3.7 billion, largely due to fewer slippages in the retail and agricultural sectors. This led to a decrease in the NPA ratio to 2.3%/0.6%. The restructured book declined to 1.3%.
For Q2 FY24, the bank reported a healthy RoA/RoE of 1.4%/15.7%. According to InvestingPro data, the bank's P/E ratio stands at a low 3.01, indicating that the stock is trading at a low price relative to its earnings.
InvestingPro Tips reveal that the company is a prominent player in the Banks industry and has been profitable over the last twelve months. It's also worth noting that the bank's stockholders receive high returns on book equity.
It is projected to deliver a RoA/RoE of 1.3%/14.9% in FY25, which has led to a 'Buy' rating for the stock.
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