Federal Bank's deposits, advances jump 21% in Q1 FY24; brokerage sees stock at Rs 170

Shares of Federal Bank Ltd rose in Monday's trade after the lender reported around 21 per cent year-on-year (YoY) growth in total deposits and gross advances, respectively, during the June quarter (Q1) of the financial year 2023-24.

The Kochi-headquartered bank, in an exchange filing, said: "Total deposits reached Rs 2,22,513 crore, with a growth of 21.40 per cent over Rs 1,83,355 crore as of June 30, 2022. Gross advances grew by 20.90 per cent to Rs 1,86,593 crore from Rs 1,54,392 crore as of June 30,2022. As per internal classification, Retail credit book grew by 20.20 per cent and wholesale credit book grew by 21.60 per cent. Retail to wholesale ratio is at 54:46 respectively."

The bank's customer deposits (total deposits excluding interbank deposits and certificates of deposit) aggregated to Rs 2,10,439 crore, a growth of 17.20 per cent over Rs 1,79,586 crore as of June 30, 2022, Federal Bank also said.

The lender's CASA ratio, the ratio of deposits in current accounts and saving accounts to total deposits, in the June quarter came at 31.85 per cent against 36.84 per cent, YoY, and 32.68 per cent, QoQ.

The stock today climbed 1.86 per cent to hit a day high of Rs 128.45 over its previous close of Rs 126.10. At today's high price, the counter traded 10.39 per cent lower from its 52-week high of Rs 143.35, hit on January 16, 2023. That said, it has gained 41.21 per cent from its one-year low price of Rs 89.30, a level seen on July 1 last year.

After the lender shared Q1 FY24 updates, brokerage Prabhudas Lilladher has given a 'Buy' rating to Federal Bank with a target price of Rs 170, suggesting a potential upside of 32.35 per cent.

"Provisional numbers were a bit mixed; while retail growth sequentially was a bit higher at 5.50 per cent, wholesale continues to grow. Hence, growth in the higher yielding retail pool is the key monitorable which could decide the NIM (Net interest margin) trajectory for Q1 FY24. Also, bank seems to incrementally rely on wholesale deposits; RTD+CASA in Q4 FY23 made up 88.40 per cent of deposits (94 per cent in Q4 FY22)," it stated.

Meanwhile, Indian equity benchmarks extended their record run today, led by gains in metals, banks, financials, automobile, consumer durables and energy stocks.

Also read: Suzlon Energy, Brightcom Group, South Indian Bank, RTN Power, L&T Finance shares top volume chart on NSE

Also read: Will HDFC Bank shares continue to command premium over ICICI Bank post merger?