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Federal Bank Q3 Results Review - Outperformance Continues: Prabhudas Lilladher

Federal Bank again surpassed its previous quarter best, with core earnings at Rs 7.75 billion, beating our estimate by ~16%.

<div class="paragraphs"><p>Indian two hundred rupee banknotes arranged for photograph. (Photo: Vijay Sartape/ Source: BQ Prime)</p></div>
Indian two hundred rupee banknotes arranged for photograph. (Photo: Vijay Sartape/ Source: BQ Prime)

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Prabhudas Lilladher Report

Federal Bank Ltd. again surpassed its previous quarter best, with core earnings at Rs 7.75 billion, beating our estimate by ~16% led by net interest margin beat which came in at 3.89% (our estimate: 3.66%) as funding cost was lower at 4.9% (our estimate: 5.1%).

Bank further raised steady state NIM guidance from 3.30% to 3.35-3.40%. We too increase NIM for FY23E by 12 basis points and FY24/25E by ~6 bps each as-

  1. high yielding book, which touched Rs 62 billion, could double in two plus years and

  2. upward deposit repricing could be slower to peers (~60% of deposits as at FY22 have a maturity more than three years).

Fee income in nine months-FY23 has risen by 43% to Rs 12.9 billion and bank expects current run-rate to continue. Hence, we increase FY23 profit after tax by 6% and FY24/25E PAT by ~2% each.

With consistent beat in core profitability, re-rating should continue for Federal Bank.

Click on the attachment to read the full report:

Prabhudas Lilladher Federal Bank Q3FY23 Results Review.pdf

More Research Reports On Federal Bank's Q3 FY23 Results Review

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