BQ Blue’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 BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Dolat Capital Report
The Federal Bank Ltd. reported a good quarter with healthy growth trends, sequentially higher net interest margin at 3.27%, improving fee lines and encouraging asset quality.
Despite expansion in NIM to 3.27%, core operating profits were flat YoY (down 1.6% YoY), impacted mainly by higher opex.
While spreads were flattish QoQ owing to compression in lending yields, NIM expansion of 7 basis points was led by efficient use of liquidity and higher loan-deposit ratio.
We build in 5-7 bps of NIM expansion over FY23/24E from FY22E levels.
Federal Bank's core pre-provision operating profit metrics at 1.6% remained muted, with profit after tax growth of 29% YoY driven by sharp decline in provisions.
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