Amazon Great Indian Festival 2020 - Electronics
Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Amazon Great Indian Festival 2020 - Electronics

| More

Federal Bank - Strengthening liability muscle; fees & charges revised upwards - ICICI Securities

Posted On: 2020-09-18 01:46:15

Federal Bank has revised some fees and charges upwards in various banking services effective 1st Oct'20 to ensure further balance stickiness, discipline and realigning with market dynamics. Key changes in liability related charges include: i) Charges on non-maintenance of AMB revised upwards by 20/48%; ii) account closure charges (if closed between 6M to 12M - which no bank charges) revised further to Rs100-300 vs Rs50-100 earlier and iii) locker charges revised upwards in the range of 8-13%. We see two-fold effect of this development: Firstly, it would further strengthen the liability franchise with improved balance stickiness and discipline. Secondly, it supports traction in non-interest income particularly from services (currently contributes ~25% to core fee income, up from ~20% since last revision in charges in Sep'19). Strength and resilience of its liability franchise reflects in 13bps improvement in deposit market share over past two years. Valuations at 0.7x FY22E offer favourable risk-reward. Maintain BUY.

- Focus on digital penetration. Upward revision in charges on cash handling and per cheque leaf above free limits, while no change in IMPS/NEFT/Net Banking charges, reflects the bank's commitment towards improving digital penetration amongst existing customer base. Charges per cheque leaf (above free limits) in regular Saving Accounts revised upwards by 50% to Rs3 per leaf from Rs2 earlier, while per leaf charges remain same for Current Account holders. Similarly, to encourage digital payments (Fed-e-business), Federal Bank proposed three revisions - A) on Saving Account - minimum free cash handling limit reduced to Rs10mn vs Rs15mn earlier, and B) on Current Account - free limit doubled to Rs30mn but charges revised upwards by ~25% (Rs4.25 per Rs1,000) and maximum charges to Rs20,000 from Rs15,000 earlier.

- Strong liability franchise to ensure undisrupted flow of deposits despite charges revision. Retail deposits of >90%, strong NR deposit base, best-in-class digital platform and incremental peak FD rates closer to large banks and savings rates at the lowest end at 2.5% - but still gaining deposit market share talks of its deposits franchise. Leveraging the brand and inherent geographical advantage, it now focuses on further strengthening liability muscle by revising AMB charges and account closure charges upwards. The same is likely to offer dual advantage of - A) higher income from services if customer fails to maintain stipulated minimum balance or B) higher SA balance if customer starts adhering to minimum balance requirements to avoid higher penal charges.

- Valuation and outlook. Favourable asset mix as reflected in moratorium at ~24% (12th July'20) and 11/12% adjusted for partial payments, strong liability franchise and boost to core fee income (though marginal) would ensure Federal Bank navigating the current cycle effectively than peers. In current circumstances, 0.7x FY22E BV seems factoring in lot of pessimism rending risk-reward favourable. We maintain BUY with an unchanged TP of Rs70.

Shares of FEDERAL BANK LTD. was last trading in BSE at Rs.52.7 as compared to the previous close of Rs. 53.55. The total number of shares traded during the day was 823137 in over 1887 trades.

The stock hit an intraday high of Rs. 53.85 and intraday low of 52.4. The net turnover during the day was Rs. 43604002.

Source: Equity Bulls

Click here to send ur comments or to

Amazon Great Indian Festival 2020 - Mobiles

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Nestle India - 3QCY20 results - First Cut - YES SECURITIES

Crude Oil - Oct 23, 2020 - Reliance Securities

Maintain BUY on Ambuja Cements - Stellar show yet again; dividend bonanza announced - HDFC Securities

ADD on Bajaj Auto - Margin beat - HDFC Securities

Maintain REDUCE on Asian Paints - Standing tall - HDFC Securities

SBI cards - Q2FY21 - Angel Broking

Biocon - Q2FY21 - Angel Broking

Mphasis - Q2FY21 numbers - Angel Broking

L&T Finance Holdings - Q2FY21 - Angel Broking

HDFC AMC - Q2FY21 - Angel Broking

Bajaj Finserv (Not rated) - Q2 FY21 Conference Call Takeaways - YES Securities

Syngene International - Q2FY21 conference call takeaways - YES Securities

SBI Cards Q2FY21 Call Highlights - YES Securities

Sterlite Technologies (Q2FY21) - Conference call takeaways - YES Securities

Asian Paints Ltd - Q2FY21 Result Update - YES Securities

HDFC AMC - Q2FY21 Result Update - YES Securities

Alembic Pharma - Solid delivery continues; Top pick BUY TP Rs 1,180 - YES Securities

Sterlite Technologies - Q2FY21 First Cut - ICICI Securities

Tata Metaliks - Q2FY21 Company Update - ICICI Securities

Bajaj Auto - Q2FY21 First Cut - ICICI Securities

Bajaj Finserv - Q2FY21 Result Update - ICICI Securities

Asian Paints - Q2FY21 First Cut - ICICI Securities

Bharti Infratel - Q2FY21 - Angel Broking

Asian Paints - Q2FY21 - Angel Broking

Bajaj Auto - Q2FY21 numbers - Angel Broking

Maintain ADD on Bajaj Finance - Prudent provisioning hits profits - HDFC Securities

FDA warning letter to Aurobindo Pharma - Angel Broking

Chennai Petroleum - Q2FY221 Results - Angel Broking

Maintain ADD on Colgate Palmolive - Healthy domestic recovery; robust margin show - HDFC Securities

Maintain BUY on UltraTech Cement - Well-rounded performance - HDFC Securities

DB Corp - Q2FY21 Result Update - ICICI Securities

Bajaj Finance - Q2FY21 Result Update - ICICI Securities

Colgate-Palmolive (India) - Q2FY21 Result Update - ICICI Securities

UltraTech Cement - Q2FY21 Result Update - ICICI Securities

Larsen & Toubro Infotech - Q2FY21 Result Update - ICICI Securities

Sagar Cements - Q2FY21 First Cut - ICICI Securities

JK Tyre & Industries - Q2FY21 First Cut - ICICI Securities

Bajaj Finserv - Q2FY21 First Cut - ICICI Securities

UltraTech Q2FY21 - Retain ADD with TP of Rs 5,104 - YES Securities

Bajaj Finance - Q2FY21 - Result Update - YES Securities

Sagar Cements Q2FY21 - EBITDA at lifetime high; maintain TP of Rs 745 - YES Securities

JK Tyre - Q2FY2021 numbers - Angel Broking

Sagar Cements - Q2FY21 Results - Angel Broking

Bajaj Finance - Q2FY21 Results - Angel Broking

Bajaj Finance Q2FY21 - Retain ADD - 12m PT of Rs. 3,600 - YES SECURITIES

PNC Infratech - JV emerges L1 bidder - Angel Broking

GMM Pfaudler - Q2FY21 Results - Angel Broking

Rane Madras - Q2FY21 numbers - Angel Broking

Colgate-Palmolive - Q2FY21 Result - Angel Broking

Quant Pick - Tata Steel - ICICI Securities

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019