Federal Bank: Turnaround in first half - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Federal Bank: Turnaround in first half

Dec 26, 2001

Federal Bank, one of the largest old private sector banks, reported a sharp improvement in overall financial performance during the first half of the current fiscal. The bank's profits before tax doubled due to a rise in interest margins and a triple digit growth in other income.

(Rs m)2QFY012QFY02Change1HFY011HFY02Change
Interest Income 2,205 2,639 19.7% 4,402 5,118 16.3%
Other Income 266 447 68.3% 537 1,076 100.6%
Interest Expenditure 1,673 1,906 13.9% 3,313 3,730 12.6%
Operating Profit (EBDIT) 532 734 37.8% 1,089 1,388 27.5%
Operating Profit Margin (%)24.1%27.8% 24.7%27.1% 
Other Expenditure 435 454 4.5% 859 932 8.5%
Profit before Tax36472799.9%7661,532100.0%
Provisions & contingencies 210 423101.7% 412 81196.8%
Tax - 110 - 60 300 400.5%
Profit after Tax/(Loss) 154 194 25.7% 294 421 43.2%
Net profit margin (%)7.0%7.3% 6.7%8.2% 
No. of Shares (eoy) 21.7 21.7   21.7 21.7  
Diluted Earnings per share*28.335.6 27.138.8 
P/E (at current price)  1.2    0.5  
*(annualised)      

The bank's revenues from core business of lending increased by 18% in the first half of the year. Federal Bank's efforts to focus on the retail market led by IT initiatives helped it fuel interest income. Interest income on advances accounted for 63% of total operating income. During the fourth quarter of the last fiscal, the bank's interest income was up by marginal 4%. The bank is adequately geared in terms of capital (CAR of 10.8%). This would help it in future business expansions.

Break-up of interest income
(Rs m)2QFY012QFY02Change1HFY011HFY02Change
Interest on advances 1,321 1,637 24.0% 2,696 3,185 18.1%
Income from investments 865 975 12.7% 1,665 1,873 12.5%
Interest on balance with RBI 20 27 37.4% 33 58 73.7%
Others - 0 - 7 2 -77.0%
Total 2,205 2,639 19.7% 4,402 5,118 16.3%

Lower cost of borrowings resulted in about 240 basis points rise in interest margins in 1HFY02. A sharp reduction in cost to income ratio to 38% in 1HFY02 from 53% in the comparable previous period was another achievement. This helped the bank to double its profits before tax. However, a similar rise in provisions and contingencies figure and higher provision for tax (deferred tax provision according to Accounting Standard 22) trimmed bottomline growth of the bank.

At the current market price of Rs 42 Federal Bank is trading at a P/E of 1x its 1HFY02 annualised earnings and Price/Book value ratio of 0.2x. The bank's lower valuations are due to its higher net NPA to advances ratio, which stood at 10.1% as on March 2001. Also, its a regional bank with most branches located in Kerala.

Equitymaster requests your view! Post a comment on "Federal Bank: Turnaround in first half". Click here!

  

More Views on News

FEDERAL BANK Announces Quarterly Results (1QFY22); Net Profit Down 13.6% (Quarterly Result Update)

Jul 26, 2021 | Updated on Jul 26, 2021

For the quarter ended June 2021, FEDERAL BANK has posted a net profit of Rs 4 bn (down 13.6% YoY). Sales on the other hand came in at Rs 35 bn (down 1.3% YoY). Read on for a complete analysis of FEDERAL BANK's quarterly results.

Federal Bank Reports Highest-Ever Quarterly Net Profit of Rs 4.8 bn (Views On News)

May 18, 2021

Shares of Federal Bank surged over 4% after reporting Q4 results.

FEDERAL BANK Announces Quarterly Results (3QFY21); Net Profit Down 8.3% (Quarterly Result Update)

Jan 21, 2021 | Updated on Jan 21, 2021

For the quarter ended December 2020, FEDERAL BANK has posted a net profit of Rs 4 bn (down 8.3% YoY). Sales on the other hand came in at Rs 35 bn (up 3.9% YoY). Read on for a complete analysis of FEDERAL BANK's quarterly results.

PNB Reports an Over Three-Fold Jump in Net Profit as Provisions Fall (Views On News)

Aug 3, 2021

The reduction in provisions for bad loans and asset quality stability may have aided the lender's earnings.

Here's Why IndusInd Bank's Net Profit Doubled in the June Quarter (Views On News)

Jul 28, 2021

All you need to know about the latest quarterly results of IndusInd Bank.

More Views on News

Most Popular

Sansera Engineering IPO: Key Points to Consider (Views On News)

Sep 8, 2021

This IPO is a pure OFS and the company is looking to raise Rs 12.8 bn at the upper price band of Rs 744.

5 Stocks that Turned Rs 1 Lakh into Rs 1 Crore (Views On News)

Sep 7, 2021

Patience is one of the biggest virtues you need to have if you want to become a crorepati in the stock market.

The Top Stocks to Sell in this Bull Market (Profit Hunter)

Sep 8, 2021

When I saw the list of so-called 'value stocks' published by a leading brokerage, my worst fears came true.

5 Indian Companies that are Leading the AI Race (Views On News)

Sep 9, 2021

During the pandemic, India reported the highest increase in the use of AI at 45% compared to other major economies. AI has potential to add US$90 bn to the Indian economy by 2025.

How to Create a Second Income from Trading (Profit Hunter)

Sep 10, 2021

My trading system that works in all kinds of markets.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2021
Get our special report Multibagger Stocks Guide (2021 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

FEDERAL BANK SHARE PRICE


Sep 17, 2021 (Close)

TRACK FEDERAL BANK

  • Track your investment in FEDERAL BANK with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

FEDERAL BANK - INDIAN OVERSEAS BANK COMPARISON

COMPARE FEDERAL BANK WITH

MARKET STATS