Sharekhan’s research report on Federal Bank
Federal Bank (FEDBK) has posted weak Q4FY2018 results, where high slippages (primarily due to RBIs revised norms) eclipsed other performance parameters. FEDBK saw its net interest income (NII) increasing by 10.8% y-o-y to Rs. 933.2 crore. Non-interest income (OI) increased by 11.4% y-o-y to Rs. 314 crore, wherein fee income growth stood at 12.3% y-o-y. High slippages impacted net interest income, thus affecting net interest margins (NIM).
We believe H2FY2019E should see stability in asset-quality performance, which will be positive for return ratios as well. We maintain our Buy rating with unchanged price target of Rs. 120.
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