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Federal Bank stock closes over 19% higher on Q1 net profit, provisions for bad loans fall

The bank's provisions for bad loans fell 15.77% to Rs 199.15 crore in Q1 compared to Rs 236.44 crore in the corresponding period of last fiscal. On a quarter-on-quarter basis, these declined 46.4% from Rs 371.53 crore. The bank's net interest income rose by 22.4% year on year (YoY) to Rs 980 crore in Q1.

twitter-logo BusinessToday.In        Last Updated: July 18, 2018  | 09:43 IST
Why Federal Bank stock closed 19% higher today

Shares of Federal Bank surged over 19 per cent after the lender reported a 25 per cent rise in net profit for first quarter of the current fiscal. The bank's provisions for bad loans fell 15.77% to Rs 199.15 crore in Q1 compared to Rs 236.44 crore in the corresponding period of last fiscal. On a quarter-on-quarter basis, these declined 46.4% from Rs 371.53 crore. The bank's net interest income rose by 22.4% year on year (YoY) to Rs 980 crore in Q1.

The lender reported loan growth of 24% YoY, which was driven by robust corporate growth of 32% YoY to form 44% of loans.

Deposits growth in Q1 stood at 16% YoY (flat QoQ) with CASA (current accounts savings accounts) growth of 15% YoY (33.7% of deposits).

The bank's stock soared 19.16 per cent to close at Rs 88.30 on the BSE. During the day, it jumped 20.64 per cent to Rs 89.40.

On the NSE, shares of the private sector lender zoomed 19.28 per cent to end at Rs 88.45.

 The stock opened at 74.95 level compared to the previous close of 74.10 level on the BSE.

 The stock has fallen 22% during the last one year and lost nearly 19% since the beginning of this year.  

 The stock has gained after five consecutive days of fall.

The company's market valuation rose by Rs 2,856.18 crore to Rs 17,469.18 crore.

In terms of equity volume, 60.60 lakh shares of the company were traded on the BSE and over 9.6 crore shares changed hands on the NSE during the day.

Meanwhile, the stock hit a fresh 52-week low of 73.60 in trade today.

22 of 29 brokerages rate the stock "buy" or 'outperform', six "hold" and one "sell", according to Reuters.

Edelweiss Securities on June 18, 2018 gave a 'buy'call on the stock with a price target of Rs 130. The brokerage gave the recommendation to buy at a price of Rs 84 for a time duration of 52 weeks.

Nirmal Bang Securities on June 14, 2018 gave a 'buy call' on the banking stock at a price level of 86.75 for a target of Rs 116 level within 52 weeks.

Private sector lender Federal Bank said its net profit rose to Rs 262.71 crore for first quarter of the current fiscal despite increase in bad loans.

The bank's net profit in the corresponding three months to June in 2017-18 stood at Rs 210.15 crore.

Total income increased to Rs 2,938.24 crore for the quarter, against Rs 2,653.19 crore in the year ago period, the bank said in a regulatory filing.

During the quarter, the asset quality of the bank deteriorated with gross non-performing assets (NPAs) rising to 3.42 per cent from 2.42 per cent as on June 30, 2017.

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