Federal Bank Q4 Review – Mixed Quarter, Management Outlook Encouraging: Axis Securities

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Federal Bank Ltd. reported a muted Q4 FY22 with operational performance below our expectations, except for lower than expected provisions resulting in a beat on profit after tax.

Advances grew by 10% YoY and the management expects the growth momentum to improve going into FY23E and expects the book to grow at 15% with most key segments contributing to the growth.

Federal Bank’s asset quality improved, with gross non-performing asset at 2.8% versus 3.1% QoQ.

Slippages came in at Rs 399 crore and included a one-off from the agri portfolio. Slippage ratio stood at 1.1% versus 1.3% QoQ.

Asset quality improvement was aided by improved recoveries and upgrades which stood at Rs 417 crore. Collection efficiency remained stable at ~95%.

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