1QFY2014 Result Update | Banking

July 24, 2013

Federal Bank
Performance Highlights
 
Particulars (` cr)
NII Pre-prov. profit PAT

NEUTRAL
CMP Target Price
% chg (qoq)
6.2 8.4 (52.4)

`381 -

1QFY14
510 401 106

4QFY13
480 369 222

1QFY13
492 347 190

% chg (yoy)
3.7 15.6 (44.5)

Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Source: Company, Angel Research

Banking 6,519 1.1 551/362 68,305 10 20,159 6,032 FED.BO FB@IN

Federal Bank announced a weak set of numbers for 1QFY2014, with a muted NII growth of 3.7% yoy. Non-interest income grew at 73.6% yoy primarily boosted by treasury gains and helped the bank to achieve a pre-provisioning profit growth of 15.6% yoy. Provisioning expense grew by 290% yoy (as the bank increased NAFED provisioning to 100%), which resulted in earnings de-growth of 44.5% yoy. NIMs improve sequentially; Asset quality pressures persist: During 1QFY2014, the bank witnessed moderate growth in its balance sheet, as its advances grew by 8.5% yoy, while deposits grew by 12.7% yoy. Within advances, Retail and SME book registered a healthy growth of 21.0% and 19.9% yoy, respectively, while corporate book de-grew by 6.0% yoy. CASA ratio came in higher by 202bp sequentially and 60bp yoy to 29.0%. NIMs improved by 6bp qoq to 3.13%, aided by a 21bp sequential fall in cost of deposits to 7.4%. Boosted by treasury gains, the overall non-interest income for the bank grew by 73.6% yoy to `216cr. Treasury income came in at `89cr compared to `26cr in 1QFY2013. Non-interest income (excluding treasury) grew strongly by 29.3% yoy to `127cr. During the quarter, the annualized slippage rate came in elevated at 2.8%, though lower than 3.8% in previous quarter. As of 1QFY2014, the Gross NPA ratio stands at 3.5% (3.4% in 4QFY2013), while the net NPA ratio stands at 0.9% (1.0% in 4QFY2013). The PCR (including technical write-offs) improved ~200bp sequentially to 83.0%. The bank restructured advances worth `76cr during the quarter. Going forward, the Management guided that few large ticket advances worth `300-400cr could slip into NPAs over the next few quarters, while the restructuring pipeline for the bank stands at ~ `150-180cr. Outlook and valuation: Though the Management has taken various steps to stabilize its asset-quality woes, but given the weakening economic environment and the recent macro-economic developments, the pace of improvement in asset quality is expected to be slower than earlier anticipated. Moreover, the bank’s gold loan portfolio accounts for ~15% of the overall loan book. As per the Management, ~10-15% of its gold loan book has a loan-to-value (LTV) of more than 90%, which could pose asset quality challenges if there is a significant correction in gold prices here on. At CMP, the stock trades at 0.9x FY2015E ABV. We recommend a Neutral rating on the stock.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 20.9 46.3 32.8

Abs. (%) Sensex Federal Bank

3m 5.2 (17.9)

1yr 17.5 (8.4)

3yr 11.3 7.0

Key financials
Y/E March (` cr) NII % chg Net profit % chg NIM (%) EPS (`) P/E (x) P/ABV (x) RoA (%) RoE (%) FY2012
1,953 11.8 777 32.3 3.6 45.4 8.4 1.1 1.4 14.4

FY2013
1,975 1.1 838 7.9 3.1 49.0 7.8 1.0 1.3 13.9

FY2014E
2,182 10.5 651 (22.3) 3.0 38.1 10.0 0.9 0.9 9.8

FY2015E
2,563 17.5 888 36.4 3.0 51.9 7.3 0.9 1.0 12.3

Vaibhav Agrawal
022 – 3935 7800 Ext: 6808 vaibhav.agrawal@angelbroking.com

Sourabh Taparia
022 – 3935 7800 Ext: 6872 sourabh.taparia@angelbroking.com

Harshal Patkar
022 – 3935 7800 Ext: 6847 harshal.patkar@angelbroking.com

Source: Company, Angel Research, CMP as of July 22, 2013

Please refer to important disclosures at the end of this report

1

Federal Bank | 1QFY2014 Result Update

Exhibit 1: 1QFY2014 performance
Particulars (` cr) Interest earned - on Advances / Bills - on investments - on balance with RBI & others - on others Interest Expended Net Interest Income Other income - Other income excl. treasury - Treasury Income Operating income Operating expenses - Employee expenses - Other Opex Pre-provision Profit Provisions & Contingencies - Provisions for NPAs - Provisions for Investments - Other Provisions PBT Provision for Tax PAT Effective Tax Rate (%)
Source: Company, Angel Research

1QFY14 1,653 1,242 397 13 1 1,144 510 216 127 89 725 325 174 151 401 245 239 (3) 9 155 50 106 32.0

4QFY13 1,583 1,168 397 15 3 1,104 480 197 139 58 677 307 151 156 369 98 91 7 0 271 49 222 18.2

% chg (qoq) 4.4 6.3 0.0 (14.0) (65.3) 3.6 6.2 9.6 (9.0) 54.6 7.2 5.8 14.8 (3.0) 8.4 149.6 162.4 NA 7,366.7 (42.7) 0.9 (52.4) 1383bp

1QFY13 1,537 1,163 355 17 2 1,045 492 124 98 26 616 269 152 117 347 63 76 (21) 7 284 93 190 32.9

% chg (yoy) 7.6 6.8 11.8 (20.8) (39.7) 9.4 3.7 73.6 29.3 239.2 17.8 20.6 13.9 29.3 15.6 290.4 215.3 NA 21.2 (45.2) (46.7) (44.5) (89)bp

FY2013 4,584 3,467 1,068 41 8 3,089 1,495 468 319 148 1,962 872 475 397 1,090 168 133 (44) 78 922 306 616 33.2

FY2012 4,079 3,111 937 22 9 2,617 1,462 372 326 46 1,834 700 398 302 1,134 321 263 45 13 813 273 539 33.6

% chg (qoq) 12.4 11.4 13.9 85.9 18.0 18.0 2.2 25.8 (2.0) 224.1 7.0 24.6 19.5 31.4 (3.9) (47.9) (49.5) NA 503.6 13.5 12.0 14.3 (45)bp

Exhibit 2: 1QFY2014 Actual vs Angel estimates
Particulars (` cr) Net interest income Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Company, Angel Research

Actual 510 216 725 325 401 245 155 50 106

Estimates 502 139 641 319 322 48 274 82 192

Var. (%) 1.5 55.3 13.2 1.9 24.3 409.6 (43.3) (39.5) (44.9)

July 24, 2013

2

Federal Bank | 1QFY2014 Result Update

Exhibit 3: 1QFY14 performance
Particulars Balance sheet Advances (` cr) Deposits (` cr) Credit-to-Deposit Ratio (%) Current deposits (` cr) Saving deposits (` cr) CASA deposits (` cr) CASA ratio (%) CAR (%) Tier 1 CAR (%) Profitability Ratios (%) Cost of deposits Yield on advances Yield on investments Reported NIM Cost-to-income ratio Asset quality Gross NPAs (` cr) Gross NPAs (%) Net NPAs (` cr) Net NPAs (%) Provision Coverage Ratio (%) Slippage ratio (%) NPA to avg. assets (%)
Source: Company, Angel Research

1QFY14 4QFY13
41,263 56,996 72.4 2,692 13,811 16,503 29.0 15.0 14.4 7.4 11.9 8.7 3.1 42.1 1,483 3.5 374 0.9 83.0 2.8 1.3 44,097 57,615 76.5 2,776 12,743 15,519 26.9 14.7 14.1 7.6 11.8 8.3 3.1 45.4 1,554 3.4 432 1.0 81.0 3.8 0.1

% chg (qoq) 1QFY13
(6.4) (1.1) (414)bp (3.0) 8.4 6.3 202bp 27bp 28bp (21)bp 9bp 41bp 6bp (330)bp (4.6) 7bp (13.5) (7)bp 204bp (102)bp 122bp 38,043 50,558 75.2 2,358 11,977 14,335 28.35 15.5 14.7 7.6 12.5 7.8 3.4 43.7 1,409 3.6 236 0.6 80.2 3.1 0.5

% chg (yoy)
8.5 12.7 (285)bp 14.2 15.3 15.1 60bp (45)bp (33)bp (17)bp (64)bp 89bp (29)bp (166)bp 5.3 (9)bp 58.2 29bp 277bp (30)bp 85bp

Balance sheet growth moderates; NIMs improve sequentially
During 1QFY2014, the bank witnessed moderate growth in its balance sheet, as its advances grew by 8.5% yoy, while deposits grew by 12.7% yoy. Within advances, Retail and SME book registered a healthy growth of 21.0% and 19.9% yoy, respectively, while the corporate book de-grew by 6.0% yoy. Post the recent volatility in gold prices, the bank cautiously de-grew its gold loan portfolio sequentially by 6.2% during the quarter. The bank’s gold loan portfolio accounts for ~15% of the overall loan book. On its gold loan book, the average LTV (including accrued interest and post the recent correction in gold prices) stands at ~75-77% (as compared to origination LTV of ~60%). As per the Management, ~10-15% of its gold loan book has a LTV of more than 90% Going forward, the Management has guided for corporate loan growth of 10% plus, on back of disbursals out of sanctions already in place, while the guidance for Retail & SME loan growth is 20% plus. On the deposits front, the bank witnessed a healthy growth of 14.2% yoy in current deposits, while growth in savings deposits was healthy at 15.3% yoy. Consequently, overall CASA deposits registered a healthy growth of 15.1% and CASA ratio as of 1QFY2014 stood at 29.0%, which was higher by 202bp sequentially and 60bp on a yoy basis.
July 24, 2013

3

Federal Bank | 1QFY2014 Result Update

Exhibit 4: Advances and deposit growth slows down
Adv. yoy chg (% ) 20.0 76.5 15.0 10.0 5.0 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14
Source: Company, Angel Research

Exhibit 5: CASA ratio rises qoq and yoy
(%) 30.0 28.0 26.0 28.7 29.5 26.9 29.0

Dep. yoy chg (%)

CDR (%, RHS) 78.0 76.0 74.0 72.4

28.4

75.2 73.3

76.5

24.0

19.0 17.8

18.9 10.4

16.8 17.7

8.5 12.7

72.0 70.0

8.0 4.8

22.0 20.0 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14
Source: Company, Angel Research

 
During 1QFY2014, the yields on advances and investments improved sequentially by 9bp and 41bp, to 11.8% and 8.7%. On the other hand the cost of deposits decreased sequentially by 21bp to 7.4%. Consequently, NIMs improved by 6bp qoq to 3.13%. Going forward, the Management has guided for the NIM to remain in the range of 3.13-3.2% for 2QFY2014.

Exhibit 6: Cost of deposits lower sequentially by 21bp ...
(%) 8 7.55 7.5 7 6.5 6 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14
Source: Company, Angel Research

Exhibit 7: ...aiding a 6bp qoq improvement in NIM
(%) 3.58 3.42 3.47

7.61

7.64

7.59 7.38

3.60 3.40 3.20 3.00 2.80 2.60

3.07

3.13

1QFY13

2QFY13

3QFY13

4QFY13

1QFY14

Source: Company, Angel Research

Non-interest income (excluding treasury) grows Treasury income propels overall non-interest income

strongly;

Boosted by treasury gains, the overall non-interest income for the bank grew by 73.6% yoy to `216cr. Treasury income came in at `89cr compared to `26cr in 1QFY2013. Non-interest income (excluding treasury) grew strongly by 29.3% yoy to `127cr. Recoveries from written-off account came in higher at `10cr as compared to `7cr in 1QFY2013.

Asset quality pressure persists
During the quarter, the banks witnessed slippages of `304cr (retail – `52cr, SME and Agri - `71cr, and corporate – `181cr). The annualized slippage rate remained elevated at 2.8%, though lower from 3.8% in the previous quarter. Gross NPA ratio as of 1QFY2014 stands at 3.5% (3.4% in 4QFY2013), while the net NPA ratio
July 24, 2013

4

Federal Bank | 1QFY2014 Result Update

stands at 0.9% (1.0% in 4QFY2013). PCR (incl. technical write-offs) for the bank improved ~200bp sequentially to 83.0%. The bank restructured advances worth `76cr during the quarter taking the total outstanding restructured book to `2,500cr (`1,955cr of standard restructured assets). The bank has `200cr exposure to NAFED, the provisioning on which was raised from 50% to100% during the quarter. Going forward, the Management guided that a few large ticket advances worth `300-400cr could slip into NPA category in the next few quarters, while the restructuring pipeline for the bank stands at ~`150-180cr.

Exhibit 8: Trends in Gross and Net NPA levels
Gross NPAs (` cr) Net NPAs (` cr) PCR (%, RHS)

Exhibit 9: Credit cost spikes on NAFED provisioning
(%)

1,800 1,500 1,200 900 600 300 80.2 80.0 81.0 83.0 90.0 80.0 70.0 60.0

1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 1QFY13 2QFY13 3QFY13 4QFY13 0.1 0.5 0.2 0.5

1.3

1,409 236

1,435 245

1,564 362

1,554 432

1QFY13 2QFY13 3QFY13 4QFY13 1QFY14
Source: Company, Angel Research

1,483 374

74.5

1QFY14

Source: Company, Angel Research

Exhibit 10: Opex trend
Staff exps (` cr) Other opex (` cr) CIR (%, RHS)

Exhibit 11: Opex-to-avg. assets trend
47.0 45.4 46.0 45.0 (%) 2.0 1.9 1.8 1.7 1.6 1.5 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14
Source: Company, Angel Research

400 300

2.0 1.9 1.8 1.7 1.7

45.8 43.8

144

117

136

200 100 -

156

43.7

132

44.0 43.0 42.0 41.0 40.0

42.1

152

159

163

151

1QFY13

2QFY13

3QFY13

4QFY13

1QFY14

Source: Company, Angel Research

July 24, 2013

174

5

Federal Bank | 1QFY2014 Result Update

Investment arguments
Asset quality remains under pressure
Over the past few years, the bank has witnessed elevated slippages (annualized slippage rate of above 3%) almost every quarter, largely emanating from negative surprises in its Corporate and SME & Agri books. Though the Management has taken various steps to stabilize its asset-quality woes, but given the weakening economic environment and the recent macro-economic developments, the pace of improvement in asset quality is expected to be slower than earlier anticipated. Moreover, the bank’s gold loan portfolio accounts for ~15% of the overall loan book. As per the Management, ~10-15% of its gold loan book has a LTV of more than 90%, which could pose asset quality challenges if there is a significant correction in gold prices here on.

Outlook and valuation
Though the bank has now slightly moderated its network expansion plans, over the last two years, the bank has grown its branch network at a CAGR of 21.8%, which has not only aided the bank to increase its low cost deposit profile (CASA ratio has reached 29.0% as of 1QFY2014 from 26.3% as of FY2011), but has also laid a platform for building a sustainable retail asset book. Though the Management has taken various steps to stabilize its asset-quality woes, but given the weakening economic environment and the recent macro-economic developments, the pace of improvement in asset quality is expected to be slower than earlier anticipated. Moreover, the bank’s gold loan portfolio accounts for ~15% of the overall loan book. As per the Management, ~10-15% of its gold loan book has a LTV of more than 90%, which could pose asset quality challenges if there is a significant correction in gold prices here on. At the current market price, the stock trades at 0.8x of FY2015E ABV. We recommend a Neutral rating on the stock.

Exhibit 12: Key assumptions
Particulars (%) Credit growth Deposit growth CASA ratio NIMs Other income growth Growth in staff expenses Growth in other expenses Slippages Coverage ratio
Source: Angel Research

Earlier estimates FY2014 23.0 18.0 26.2 2.9 (7.0) 15.0 15.0 2.3 76.0 FY2015 20.0 20.0 25.1 2.9 15.4 15.0 15.0 2.0 75.2

Revised estimates FY2014 18.0 15.0 27.1 3.0 (7.2) 15.0 15.0 2.8 83.1 FY2015 20.0 20.0 25.9 3.0 11.4 15.0 15.0 2.0 82.1

July 24, 2013

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Federal Bank | 1QFY2014 Result Update

Exhibit 13: Change in estimates
FY2014 Particulars (` cr) NII Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Angel Research

FY2015 Earlier estimates 2,562 713 3,275 1,560 1,715 248 1,467 499 968 Revised Var. (%) estimates 2,563 687 3,250 1,560 1,690 345 1,345 457 888 0.1 (3.7) (0.8) (1.4) 39.2 (8.3) (8.3) (8.3)

Earlier estimates 2,184 617 2,802 1,356 1,445 229 1,216 365 851

Revised Var. (%) estimates 2,182 617 2,798 1,356 1,442 538 904 253 651 (0.1) (0.1) (0.1) (0.2) 134.9 (25.7) (30.6) (23.5)

Exhibit 14: P/ABV band
800 700 600 500 400 300 200 100 0 Price (`) 0.3x 0.6x 0.9x 1.2x 1.5x

Oct-06

Feb-09

Sep-09

May-07

Nov-10

Dec-07

Aug-12

Source: Company, Angel Research

July 24, 2013

Mar-06

Mar-13

Oct-13

Jun-11

Apr-10

Jan-12

Jul-08

7

Federal Bank | 1QFY2014 Result Update

Exhibit 15: Recommendation summary
Company Reco. AxisBk FedBk HDFCBk ICICIBk* SIB YesBk AllBk AndhBk BOB BOI BOM CanBk CentBk CorpBk DenaBk IDBI# IndBk IOB J&KBk OBC PNB SBI* SynBk UcoBk UnionBk UtdBk VijBk Buy Neutral Accumulate Buy Neutral Neutral Accumulate Neutral Accumulate Accumulate Accumulate Neutral Neutral Accumulate Neutral Neutral Accumulate Neutral Neutral Buy Accumulate Accumulate Accumulate Reduce Accumulate Neutral Accumulate CMP (`) 1,200 381 682 975 23 424 85 79 587 212 49 320 64 330 67 71 107 48 1,257 174 646 1,824 112 69 156 46 45 Tgt. price (`) 1,441 745 1,160 95 642 236 54 360 113 203 718 2,077 121 63 178 47 Upside (%) 20 9 19 12 9 12 9 9 5 17 11 14 7 (8) 15 5 FY2015E P/ABV (x) 1.3 0.9 3.2 1.4 0.9 1.8 0.4 0.5 0.6 0.5 0.5 0.5 0.6 0.4 0.4 0.4 0.4 0.3 1.0 0.4 0.6 1.0 0.6 0.7 0.5 0.3 0.5 FY2015E Tgt. P/ABV (x) 1.6 3.5 1.7 0.4 0.7 0.5 0.6 0.5 0.4 0.4 0.7 1.2 0.6 0.7 0.6 0.5 FY2015E FY13E-15E EPS P/E (x) CAGR (%) 7.6 7.3 15.1 9.8 5.5 8.5 2.6 3.4 4.1 3.1 3.8 3.7 3.4 3.1 2.7 3.2 2.6 2.4 6.0 2.8 3.7 6.4 4.0 4.4 3.3 2.3 4.1
#

FY2015E RoA (%) 1.6 1.0 1.9 1.6 0.9 1.3 0.7 0.7 0.9 0.7 0.6 0.8 0.6 0.7 0.7 0.8 0.9 0.6 1.2 0.8 1.1 1.0 0.6 0.6 0.7 0.6 0.4

FY2015E RoE (%) 18.1 12.3 22.8 16.2 16.2 22.8 13.6 13.2 16.0 15.1 15.3 14.2 14.3 14.2 14.7 13.3 14.7 13.0 16.8 12.9 16.5 17.0 14.6 13.6 15.2 14.7 11.5

19.1 2.9 26.3 17.4 5.7 17.1 18.3 (0.3) 16.8 21.6 10.0 15.4 52.3 5.7 3.7 25.1 7.0 78.9 (1.7) 17.0 14.5 17.5 (8.5) 67.5 14.7 54.6 9.5

Source: Company, Angel Research; Note: *Target multiples=SOTP target price/ABV (including subsidiaries); Without adjusting for SASF

July 24, 2013

8

Federal Bank | 1QFY2014 Result Update

Income statement
Y/E March (` cr) NII - YoY growth (%) Other income - YoY growth (%) Operating income - YoY growth (%) Operating expenses - YoY growth (%) Pre-prov. profit - YoY growth (%) Prov. & cont. - YoY growth (%) PBT - YoY growth (%) Prov. for taxation - as a % of PBT PAT - YoY growth (%) FY09 1,315 51.5 516 30.6 1,831 45.0 571 21.9 1,260 58.6 467 58.8 793 58.6 293 36.9 500 36.0 FY10 1,411 7.3 531 2.9 1,942 6.0 677 18.5 1,265 0.4 405 (13.2) 860 8.4 395 46.0 465 (7.2) FY11 1,747 23.8 517 (2.7) 2,263 16.6 836 23.5 1,427 12.8 525 29.6 902 4.9 315 34.9 587 26.4 FY12 1,953 11.8 532 3.0 2,486 9.8 979 17.1 1,506 5.6 337 (35.9) 1,170 29.7 393 33.6 777 32.3 FY13 1,975 1.1 664 24.8 2,639 6.2 1,180 20.5 1,460 (3.1) 266 (21.1) 1,194 2.1 356 29.8 838 7.9 FY14E 2,182 10.5 617 (7.2) 2,798 6.0 1,356 15.0 1,442 (1.2) 538 102.4 904 (24.3) 253 28.0 651 (22.3) FY15E 2,563 17.5 687 11.4 3,250 16.1 1,560 15.0 1,690 17.2 345 (35.8) 1,345 48.8 457 34.0 888 36.4

Balance sheet
Y/E March (` cr) Share Capital Reserves & Surplus Deposits - Growth (%) Borrowings Tier 2 Capital Other Liab. & Prov. Total Liabilities Cash Balances Bank Balances Investments Advances - Growth (%) Fixed Assets Other Assets Total Assets - Growth (%) FY09 171 4,155 32,198 24.3 749 470 1,108 38,851 2,214 1,223 12,119 22,392 18.4 281 622 38,851 19.5 FY10 171 4,519 12.0 1,227 320 1,380 2,319 405 FY11 171 4,938 19.3 1,582 306 1,445 2,935 813 FY12 171 5,535 48,937 13.8 3,935 306 1,742 60,627 2,424 1,108 17,402 37,756 18.2 326 1,610 60,627 17.8 FY13 171 6,194 57,615 17.7 4,957 230 1,883 71,050 2,743 977 21,155 44,097 16.8 397 1,681 71,050 17.2 FY14E 171 6,705 15.0 5,240 224 2,302 2,982 1,213 FY15E 171 7,394 20.0 6,234 219 2,730 3,578 1,444

36,058 43,015

66,257 79,509

43,676 51,456

80,900 96,257

13,055 14,538 26,950 31,953 20.4 290 658 12.4 18.6 290 927 17.8

22,318 26,011 52,034 62,441 18.0 439 1,914 13.9 20.0 507 2,277 19.0

43,676 51,456

80,900 96,257

July 24, 2013

9

Federal Bank | 1QFY2014 Result Update

Ratio analysis
Y/E March Profitability ratios (%) NIMs Cost to Income Ratio RoA RoE B/S ratios (%) CASA Ratio Credit/Deposit Ratio CAR - Tier I Asset Quality (%) Gross NPAs Net NPAs Slippages Loan Loss Prov./Avg. Assets Provision Coverage Per Share Data (`) EPS ABVPS DPS Valuation Ratios PER (x) P/ABVPS (x) Dividend Yield DuPont Analysis (%) NII (-) Prov. Exp. Adj. NII Treasury Int. Sens. Inc. Other Inc. Op. Inc. Opex PBT Taxes RoA Leverage (x) RoE 3.7 1.3 2.4 0.2 2.6 1.2 3.8 1.6 2.2 0.8 1.4 8.7 12.2 3.4 1.0 2.4 0.3 2.7 1.0 3.7 1.6 2.1 1.0 1.1 9.2 10.3 3.7 1.1 2.6 0.1 2.7 1.0 3.7 1.8 1.9 0.7 1.2 9.7 12.0 3.5 0.6 2.9 0.1 3.0 0.8 3.8 1.7 2.1 0.7 1.4 10.4 14.4 3.0 0.4 2.6 0.3 2.9 0.7 3.6 1.8 1.8 0.5 1.3 10.9 13.9 2.9 0.7 2.2 0.1 2.3 0.7 3.0 1.8 1.2 0.3 0.9 11.5 9.8 2.9 0.4 2.5 0.1 2.6 0.7 3.3 1.8 1.5 0.5 1.0 12.3 12.3 13.0 1.5 1.3 14.0 1.4 1.3 11.1 1.3 2.2 8.4 1.1 2.4 7.8 1.0 2.4 10.0 0.9 1.8 7.3 0.9 2.6 29.3 252.6 5.0 27.2 273.9 5.0 34.3 298.3 8.5 45.4 333.3 9.0 49.0 369.2 9.0 38.1 401.7 7.0 51.9 442.0 10.0 2.6 0.3 3.0 1.0 88.4 3.0 0.5 3.3 1.0 84.3 3.5 0.6 3.2 1.0 83.4 3.3 0.5 2.1 0.4 84.7 3.4 1.0 2.1 0.3 72.2 3.0 0.5 2.8 0.7 83.1 2.5 0.5 2.0 0.3 82.1 24.5 69.5 20.2 18.4 26.2 74.7 18.4 16.9 26.9 74.3 16.8 15.6 27.5 77.2 16.6 15.9 27.2 76.5 14.7 14.1 27.1 78.5 14.0 13.4 25.9 78.5 13.0 12.4 3.8 31.2 1.4 12.2 3.5 34.9 1.1 10.3 3.8 36.9 1.2 12.0 3.6 39.4 1.4 14.4 3.1 44.7 1.3 13.9 3.0 48.5 0.9 9.8 3.0 48.0 1.0 12.3 FY09 FY10 FY11 FY12 FY13 FY14E FY15E

July 24, 2013

10

Federal Bank | 1QFY2014 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Pvt. Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Pvt. Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Pvt. Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Federal Bank No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

July 24, 2013

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