Federal Bank and Bank of Maharashtra post stellar Q3FY23 numbers

As the banking sector results have started coming in for Q3FY23, it looks like PSU banks may continue to perform in this quarter also, as was the case with the Bank of Maharashtra. The clean-up of PSU Banks is playing out for the last few quarters and looks set to continue. A private bank like Federal Bank also posted a good set of numbers with the rising demand for loans.

Federal Bank reports a 54% rise in net profits

Federal Bank on Monday 16th January, reported its standalone net profit at Rs 803.6 crore for the third quarter ended December 2022 for the current fiscal or Q3FY23, up 54% as compared to ₹521.7 crore in the same quarter in the previous fiscal.

The lender’s net interest income (NII), which is the difference between the interest earned and expended, rose 27% YoY to ₹1,956 crore as compared to ₹1,539 crore in Q3FY22. Federal Banks’ net interest margin or NIM rose to 3.49% during the December 2022 quarter, higher by 22 basis points (bps) YoY and 19 bps QoQ. Its loan growth was at 4.3% QoQ 17.1% from the year-ago quarter.

Meanwhile, its asset quality improved slightly as gross non-performing assets (NPAs) stood at 2.43% from 2.46% QoQ whereas net NPAs came down to 0.73% from 0.78% in the previous quarter of September 2022. The GNPA at 2.43% was the lowest in 21 quarters, whereas its net NPA at 0.73% was the lowest in 8 quarters.

The Bank’s commercial banking advances surged by 18.40% YoY to reach Rs 16794.70 crore, whereas corporate advances stood at Rs 62,182.66 crore in Q3FY23, registering a growth of 19.13% YoY. CASA deposits of the bank also grew by 7.19% to reach Rs 68,967.14 crore.

Management speaks: “An all-round strong operating performance has helped us deliver the highest ever quarterly profit. The credit cost has improved on the back of continued strong asset quality,” said Shyam Srinivasan, Managing Director, and CEO, of Federal Bank.

Univest’s Technical View

The stock has also risen 40% in the last 6 months and surged nearly 43% last year. Relative strength Index RSI (Monthly 71) is showing the stock has become weak in terms of aggressive growth but we can hold the stock until it takes support at RSI 50 in the monthly time frame.

Bank of Maharashtra Q3 PAT jumps two-fold to Rs 775 cr due to asset quality

State-run Bank of Maharashtra (BoM) on Monday reported a two-fold jump in its standalone profit after tax (PAT) at Rs 775 crore in the quarter that ended on December 2022 due to improved asset quality. The Pune-based bank had posted a net profit of Rs 325 crore in the same quarter a year ago. The bank’s operating profit jumped by 35.9% Year-on-Year and 8.1 % from the September quarter to Rs 1,580.3 crore. Provisions increased compared to the previous quarter, rising 21.4 percent to Rs 581.9 crore.

The bank’s total income increased to Rs 4,770 crore in the latest December quarter from Rs 3,893 crore in the year-ago period, BoM said in a regulatory filing. The capital adequacy ratio rose to 17.53% in the December quarter as against 14.8%.

On the asset quality front, the bank recorded an improvement with gross NPAs (Non-Performing Assets) declining to 2.94 percent, as compared to 4.73 percent at the end of the third quarter of the previous fiscal. At the same time, net NPAs eased below 1 percent to 0.47 percent, as against 1.24 percent in the same period a year ago.

Univest’s Technical view: 

The stock has almost double from the September bottom due to the PSU bank stocks rally. The Bank has taken a strong support at 32 Rs, If it breaks down the support we might see the stock coming back to 22. RSI in both monthly & weekly timeframe is trading around 70, its good to go until and unless it breaks RSI 50.

ABOUT THE AUTHOR

Ketan Sonalkar (SEBI Rgn No INA000011255)

 

Ketan Sonalkar is a certified SEBI registered investment advisor and head of research at Univest. He is one of the finest financial trainers, with a track record of having trained more than 2000 people in offline and online models. He serves as a consultant advisor to leading fintech and financial data firms. He has over 15 years of working experience in the finance field. He runs Advisory Services for Direct Equities and Personal Finance Transformation.

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