Net Interest Income (NII)

• NII = Interest Income – Interest Expenses
• Net Interest Income (NII) rose 11% YoY at Rs.1,216 Cr in Q4 FY20 versus Rs.1,0967 Cr in Q4 FY19.
• The QoQ growth in NII is 5% from Rs.1,155 Cr in Q3 FY20 mainly on account of flat growth in Interest Expenses QoQ.

Pre-provisioning Operating Profit (PPOP)

• PPOP = (Total Operating Income – Operating Expenses)
• Pre-provisioning Operating Profit is increased by 27% YoY and 29% QoQ on account of :
  • Robust growth in other income, which stood at Rs.711 Cr in Q4 FY20 up by 73% YoY & 74% QoQ
  • It is mainly due to Profit on sale of securities in Q4 FY20 is at Rs.369 Cr grew by 401% YoY

Provisions

• Total Provisions were up 63% YoY and 117% QoQ to Rs.658 Cr in Q4 FY20.
• Of the total provisions, COVID-Related provisions were Rs.93 Cr which were higher than the Rs.30 Cr required under RBI regulations.
• While, the other Provisions and contingencies surged 219.25% to Rs.568 Cr in Q4 FY20 from Rs.178 Cr in Q4 FY19. 

Net Profit

• Federal Bank’s net profit dropped 21% to Rs.301 Cr in Q4 FY20 from Rs.382 Cr in Q4 FY19 and Rs.441 Cr in Q3 FY20.
• The fall in Net Profit QoQ as well as YoY is mainly on account of :
  1. Subdued growth in Net Interest Income
  2. Rise in Operating Expenses
  3. Significant increase in Provisions in Q4 FY20

Asset Quality

• Bank’s Gross NPA ratio (The Ratio of Gross NPAs to Gross advances) stood at 2.84% as on Q4 FY20 as against 2.99% as on Q3 FY20 and 2.92% as on Q4 FY19.
• Net NPA ratio (Net NPAs to Net advances) stood at 1.31% as on Q4 FY20 as against 1.63% as on Q3 FY20 and 1.48% as on Q4 FY19.
  • Thus the asset quality of the Bank has improved substantially, which is a positive sign.
• Provision coverage ratio (PCR) of the bank was at 72.48% as on Q4 FY20. PCR is improved significantly YoY as well as QoQ on account of higher provisions in this quarter.
  • We can see that the bank has increased the provisions substantially to face any unfavorable situation that may arise due to the pandemic and strengthened the balance sheet.

• Net Interest Margin (NIM)
  • NIM of the bank eroded YoY from 3.17% in Q4 FY19 to 3.04% in Q4 FY20. However, it is improving QoQ from 3.00% in Q3 FY20.
• Cost to Income Ratio
  • The ratio is improved sequentially QoQ from 52.40% in Q3 FY20 to 50.22% in Q4 FY20.
• Capital Adequacy Ratio
  • It is improved QoQ as well as YoY and at 14.35% in Q4 FY20.
• Return on Assets (ROA)
  • Bank’s ROA is deteriorated to 0.69% from 1.04% last quarter.
• Return on Equity (ROE)
  • Whereas, ROE is also declined to 8.41% in Q4 FY20 from 12.50% in Q3 FY20 and 11.86% in Q4 FY19.

Federal Bank Stock Analysis and understanding Covid Impact on the Bank

About Federal Bank

Federal Bank Limited is a major Indian commercial bank in the private sector. The Bank operates in four segments: treasury operations, wholesale banking, retail banking and other banking operations.

Federal Bank Share Analysis

This video offers a detailed Federal Bank stock analysis with an in-depth study of Federal Bank results. It gives a thorough analysis of Federal Bank fundamentals & other financials by providing figures of Interest Income, Net Interest Income, Operating Income & different ratios. Further, a significant increase in other income of the bank is observed, which is incurred due to Yes Bank share sale. This is regarded as a significant booster in the company’s performance. Whereas, the operating expenses have seen an increase, both annually & quarterly, thus indicating a loss in the operational efficiency. Other federal bank financials are also discussed like provisions, Net Interest Margin, Cost to Income ratio, etc. Moreover, detailed segmentation of the “other income mix” is also provided, which offers a detailed Federal Bank analysis.

Federal Bank Annual Report: Financials & Performance

Further, a year on year rise in federal bank balance sheet size is observed. Additionally, other federal bank financial statements are thoroughly discussed. You can check out the financial statements & quarterly results of the company, along with federal bank share price, on the stock-o-meter feature of our website. The Federal Bank Loan Book Mix is discussed in the video, and the segmentation of the Wholesale & Retail loans are provided. It can be seen that the bank aims to improve retail loan numbers.

Make A Viable Investment Decision with Federal Bank Research Report

The investors will get an in-depth understanding of the Federal Bank stock, with a thorough analysis of various ratios, financial statements & the loan book of the company. Different vital ratios like Return on Asset, Return on Equity, Net Interest Margin, etc., are discussed, thus, providing users with federal bank fundamental analysis. Further, the users will get to know the percentage of the total loan book, which is under the moratorium, along with segment-wise segregation. The Price to earning ratio figure is also provided to the users, along with the statistics of Price to Book ratio, Dividend Yield, etc.

All in all, through this video of Federal Bank Company Analysis, the investors will be able to make a viable investment decision.

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