Federal Bank Research Reports By Nirmal Bang, Motilal Oswal, ICICI-Direct & PL

Federal Bank revamped its top management. It has inducted a new executive director, Mr. Ganesh Sankaran (from HDFC Bank) and chief operating officer, Ms. Shalini Warrier, (also from Standard Chartered Bank). The change brought in by these new officials is already witnessed in healthy QoQ corporate credit growth. The management plans to focus on better-rated corporates and secured retail segment. Share of corporate credit to entities with BBB rating and above increased to 72% from 57% earlier. Its liability franchise strengthened further with CASA deposit ratio at 33% and strong deposit flow in NRE accounts. The bank has improved its market in NRE remittance by 400bps to 12%. It has never resorted to 5/25 refinancing and SDR and has limited exposure to highly leveraged groups. The management gave guidance of loan slippage easing going forward The bank is well placed to take advantage of likely macro-economic recovery, being already better capitalised with its Tier-I capital ratio at 13.4%. It is unlikely to raise capital for at least the next three years. Balance sheet consolidation is behind and the bank is now set to grow at the rate of 18%-20%. Better operating efficiency at branches set up recently is also expected to result in a significant improvement in overall operating efficiency.

FederalBank_Idirect

Federal-Bank-PL

Federal-Bank-Motilal-Oswal-2016

Federal Bank-4QFY16 Result Update-2 May 2016