4QFY2012 Result Update | Banking

May 15, 2012

Federal Bank
Performance Highlights
Particulars (` cr) NII Pre-prov. profit PAT
Source: Company, Angel Research

NEUTRAL
CMP Target Price
% chg (qoq)
(7.0) (11.1) 17.7

`417 -

4QFY12
491 372 238

3QFY12
528 419 202

4QFY11
448 350 172

% chg (yoy)
9.7 6.3 38.4

Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Banking 7,127 1.2 480/322 46,806 10 16,328 4,943 FED.BO FB@IN

For 4QFY2012, Federal Bank reported 38.4% yoy (up 17.7% qoq) growth in its net profit to `238cr, which was in-line with our estimates. Although operating income growth was moderate at 10.7% yoy, lower provisioning expenses (decline of 80.5% yoy) on account of higher recoveries and upgradations boosted the bottom line. We recommend Neutral on the stock. Asset quality improves sequentially: For FY2012, the banks advances and deposits grew by 18.2% yoy and 13.8% yoy, respectively. On a qoq basis, advances and deposits grew by 13.7% and 4.7%, respectively. On the advances front, gold loans continued to witness robust traction, growing by over `600cr during 4QFY2012, taking the overall proportion of gold loans (`3,600cr as of 3QFY2012) to 9.5% of the loan book. The banks NIM declined by 38bp qoq on account of overall higher cost of deposits (de-regulation of NRE term deposits) and lower yield on advances (down 39bp qoq) due to FITL reversals during the quarter. During 4QFY2012, growth in core fee income remained muted; however, treasury income witnessed healthy traction, leading to 16.4% qoq growth in non-interest income. The banks slippages for 4QFY2012 declined by 22.7% on a sequential basis to `269cr (annualized slippage ratio of 3.4%), of which ~`130cr were on account of slippages from corporate accounts (`87cr due to classification of Kingfisher as NPA). The remaining slippages were from the SME and retail segments. The bank restructured accounts worth `920cr in 4QFY2012 (majorly due to Air India and Rajasthan SEB), taking the outstanding restructured book to `2,036cr. Outlook and valuation: The banks valuations at 1.0x FY2014 ABV are higher than the 0.5-0.7x range at which mid-size PSU banks with similar KPIs are trading. While in the medium term, we expect a gradual increase in the banks leverage to lead to higher RoEs, higher valuations coupled with the diminished advantage of low-cost NRE deposits are likely to limit upside from current levels. Hence, we recommend a Neutral rating on the stock.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 21.4 44.7 34.0

Abs. (%) Sensex Federal Bank

3m (3.9)

1yr

3yr 34.1

(10.3) (11.9)

(5.1) 116.2

Key financials
Y/E March (` cr) NII % chg Net profit % chg NIM (%) EPS (`) P/E (x) P/ABV (x) RoA (%) RoE (%) Source: Company, Angel Research FY2011
1,747 23.8 587 26.4 3.8 34.3 11.8 1.4 1.2 12.0

FY2012
1,953 11.8 777 32.3 3.6 45.4 8.9 1.2 1.4 14.4

FY2013E
2,186 11.9 850 9.4 3.4 49.7 8.2 1.1 1.3 14.1

FY2014E
2,485 13.6 983 15.6 3.3 57.4 7.1 1.0 1.3 14.5

Vaibhav Agrawal
022 3935 7800 Ext: 6808 vaibhav.agrawal@angelbroking.com

Varun Varma
022 3935 7800 Ext: 6847 varun.varma@angelbroking.com

Sourabh Taparia
022 3935 7800 Ext: 6872 sourabh.taparia@angelbroking.com

Please refer to important disclosures at the end of this report

Federal Bank | 4QFY2012 Result Update

Exhibit 1: 4QFY2012 performance

Particulars (` cr) Interest earned - on Advances / Bills - on investments - on balance with RBI & others - on others Interest Expended Net Interest Income Other income Other income excl. treasury - Fee Income - Treasury Income - Recoveries from written off a/c - Forex Income Operating income Operating expenses - Employee expenses - Other Opex Pre-provision Profit Provisions & Contingencies - Provisions for NPAs - Provisions for Investments - Other Provisions PBT Provision for Tax PAT Effective Tax Rate (%)
Source: Company, Angel Research

4QFY12 3QFY12 % chg (qoq) 4QFY11 % chg (yoy) 1,479 1,078 378 13 9 988 491 161 124 79 36 21 24 652 279 146 133 372 16 (41) (10) 67 357 119 238 33.4 1,467 1,084 367 10 5 939 528 138 122 67 16 28 28 666 247 138 109 419 115 92 23 0 303 102 202 33.5 0.8 (0.5) 2.9 26.1 89.8 5.2 (7.0) 16.4 1.6 18.5 132.6 (23.6) (14.3) (2.1) 13.0 5.6 22.4 (11.1) (86.5) NA NA NA 17.6 17.4 17.7 (5)bp 1,100 857 239 3 1 652 448 141 134 68 7 42 24 589 239 135 104 350 79 83 6 (9) 271 99 172 36.6 34.5 25.8 58.4 384.5 534.2 51.4 9.7 13.7 (7.5) 16.6 427.6 (49.6) (2.5) 10.7 17.1 8.3 28.5 6.3 (80.5) NA NA NA 31.8 20.4 38.4 (316)bp

Exhibit 2: 4QFY2012 Actual vs. Angel estimates

Particulars (` cr) Net interest income Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Company, Angel Research

Actual 491 161 652 279 372 16 357 119 238

Estimates 537 157 694 269 425 104 322 95 227

Var. (%) (8.5) 2.0 (6.1) 3.9 (12.5) (85.1) 11.0 26.1 4.7

May 15, 2012

Federal Bank | 4QFY2012 Result Update

Exhibit 3: 4QFY2012 performance

Particulars Balance sheet Advances (` cr) Deposits (` cr) Credit-to-Deposit Ratio (%) Current deposits (` cr) Saving deposits (` cr) CASA deposits (` cr) CASA ratio (%) CAR (%) Profitability Ratios (%) Cost of deposits Yield on advances 7.6 12.5 7.5 3.6 42.9 1,301 3.4 199 0.5 84.7 3.4 (0.3) 7.6 12.9 7.8 3.9 37.1 1,363 4.0 244 0.7 82.1 4.1 0.6 (2)bp (39)bp (29)bp (38)bp 573bp (4.6) (62)bp (18.3) (21)bp 257bp (76)bp (91)bp 6.0 11.1 7.0 4.0 40.5 1,148 3.5 191 0.6 83.4 4.3 0.7 156bp 143bp 55bp (44)bp 234bp 13.3 (14)bp 4.4 (7)bp 131bp (92)bp (95)bp 37,756 48,937 77.2 2,546 10,930 13,476 27.5 16.6 33,206 46,742 71.0 2,084 11,102 13,186 28.2 15.9 13.7 4.7 611bp 22.1 (1.5) 2.2 (67)bp 73bp 31,953 43,015 74.3 2,157 9,148 11,305 26.3 16.8 18.2 13.8 287bp 18.0 19.5 19.2 126bp (15)bp 4QFY12 3QFY12 % chg (qoq) 4QFY11 % chg (yoy)

Yield on investments
Reported NIM Cost-to-income ratio Asset quality Gross NPAs (` cr) Gross NPAs (%) Net NPAs (` cr) Net NPAs (%) Provision Coverage Ratio (%) Slippage ratio (%) NPA to avg. assets (%)
Source: Company, Angel Research

Advances for FY2012 grow in-line with industry after a surge in 4QFY2012
For FY2012, the banks advances and deposits grew by 18.2% yoy and 13.8% yoy, respectively. On a qoq basis, advances and deposits grew by 13.7% and 4.7%, respectively. Current account deposit accretion picked up during 4QFY2012, with 22.1% qoq growth (up 18.0% yoy); however, savings accounts declined by 1.5% on a sequential basis (up by healthy 19.5% yoy). Reported CASA ratio on a qoq basis declined by 67bp to 27.5%. On the advances front, gold loans continued to witness robust traction, growing by over `600cr during 4QFY2012, taking the overall proportion of gold loans (`3,600cr as of 3QFY2012) to 9.5% of the loan book. Management indicated that the bank would continue to focus on growing its gold loan portfolio in the coming fiscal year as well. Management aims to grow its advances by 20-22% for FY2013 by further building its retail (focus on home and auto loans) and SME portfolios. Management aims to diversify its loan book into the retail, SME and corporate sectors such that each segment contributes nearly one-third to the total loan book. Post the RBIs deregulation of NRE term and saving deposits rates in December 2011, Federal Bank had increased the rate on NRE term deposits to 9.5% (from ~3.8% before deregulation), while keeping the saving account rate constant at 4%

May 15, 2012

Federal Bank | 4QFY2012 Result Update

effective January 17, 2012. The effect of de-regulation was witnessed in 4QFY2012 with `317cr of low cost NRE term deposits re-pricing upwards and NRE savings deposits declining by `481cr. The cost of funds could be higher by 58bp of total ATA in FY2013 on account of higher cost on NRE term deposits (18bp on `2,086cr of existing high cost NRE term deposits and 4bp on `419cr of low cost NRE term deposits which will be repriced in the coming quarters) and outflow of NRE savings to higher yielding NRE term deposits (cost of 36bp considering worst case scenario). Considering the erosion of low-cost advantage of these NRE deposits, we have factored in a margin compression of ~30bp in FY2014 over FY2012.

Exhibit 4: Movement in NRI deposit base sequentially

Deposit type (` cr) NRE SB NRO SB FCNR (B) LOW COST TERM DEPOSIT LOW COST NRI DEPOSIT (SUB TOTAL) HIGH COST NRE TERM DEPOSIT NRO TERM DEPOSIT TOTAL NRI DEPOSIT
Source: Company, Angel Research

31-Mar-12 4,215 453 1,241 419 6,327 2,086 2,746 11,185

31-Dec-11 4,695 437 1,552 736 7,420 390 2,713 10,522

The bank opened ~115 branches during the quarter, taking the total branches to 950. Management aims to take the total number of branches to 1,000 by July 2013 and then add ~100 branches more over the remainder of FY2013 (concentrated in 4QFY2013).

Exhibit 5: Surge in advances in 4QFY2012

Adv. qoq chg (% ) 18.0 14.0 10.0 6.0 2.0 (2.0) (6.0) (10.0) 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12
Source: Company, Angel Research

Exhibit 6: CASA ratio declines qoq

CDR (%, RHS) (%) 28.5 27.2 27.0 26.3 25.7 25.5 28.2 27.5

Dep. qoq chg (%)

74.3

74.5

10.1

13.7

80.0 77.2 76.0

5.1

4.7

71.0

13.1 16.5

72.0 68.0

0.1 (0.2)

71.1

(1.2) (1.1)

64.0 60.0 24.0 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12

Source: Company, Angel Research

The banks NIM declined by 38bp qoq on account of overall higher cost of deposits (de-regulation of NRE term deposits) and lower yield on advances (down 39bp qoq) due to FITL reversals during the quarter.

May 15, 2012

Federal Bank | 4QFY2012 Result Update

Exhibit 7: Yield on advances lower on FITL reversals

(%) 14.00 13.00 12.00 11.00 10.00 9.00 8.00 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 11.09 12.74 11.98 12.91 12.52

Exhibit 8: NIM declines by 38bp qoq

(%) 4.20 4.00 3.80 3.60 3.40 3.20 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 4.00 3.87 3.77 3.56 3.94

Source: Company, Angel Research

Source: Company, Angel Research

Fee income remains subdued

During 4QFY2012, growth in core fee income remained muted; however, treasury income witnessed healthy traction, leading to 16.4% qoq growth in non-interest income. Treasury income (`36cr) nearly increased by five times on a yoy basis and more than doubled on a qoq basis, although on a low base. Recoveries from written-off accounts declined by 49.6% yoy for 4QFY2012 and have remained low throughout FY2012 on account of lower write-offs during FY2012 (as per management). Management expects strong growth from the treasury and forex segments going ahead and has guided for fee income growth of above 20% for FY2013.

Higher upgradations lead to lower provisioning expenses

The banks slippages for 4QFY2012 declined by 22.7% on a sequential basis to `269cr (annualized slippage ratio of 3.4%), of which ~`130cr were on account of slippages from corporate accounts (`87cr due to classification of Kingfisher as NPA). The remaining slippages were from the SME and retail segments. Management sounded confident of lower slippages going ahead and has guided for credit costs of 90-100bp for FY2013. The bank witnessed strong recoveries and upgradations (`330cr in 4QFY2012 compared to `187cr in 3QFY2012) leading to lower gross and net NPAs on a sequential basis. Higher upgradations led to `41cr of write-back on loan loss provisions, leading to negative credit cost for the quarter. However, the bank had to provide ~`45cr on sacrifice on restructured assets (including NPV hit on Air India) during 4QFY2012. The bank restructured accounts worth `920cr in 4QFY2012 (majorly due to Air India and Rajasthan SEB), taking its outstanding restructured book to `2,036cr. The bank has till now witnessed `428cr of slippages from its restructured book. Management indicated that it has no major restructuring in the pipeline currently.

May 15, 2012

Federal Bank | 4QFY2012 Result Update

Exhibit 9: NPA amounts reduce sequentially

Gross NPAs (` cr) Net NPAs (` cr) PCR (%, RHS)

Exhibit 10: Credit cost negative for 4QFY2012

95.0 90.0 85.0 80.0 75.0 70.0 65.0 60.0 1.0 0.8 0.6 0.4 0.2 (0.2) (0.4) 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 (0.3) 0.7 0.4 0.9 0.6

1,500 1,200 900 600 83.4 83.0

80.4

80.5

81.1

1,148 191

1,300 236

1,250 196

1,363 244

300 -

4QFY11 1QFY12 2QFY12 3QFY12 4QFY12

Source: Company, Angel Research Source: Company, Angel Research

Exhibit 11: Staff expenses higher qoq

Staff exps (` cr) Other opex (` cr) CIR (%, RHS)

1,301 199

Exhibit 12: Opex-to-average assets trends

(%) 2.0 1.9 1.8 1.7 1.6 1.5 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1.7 1.7 2.0 1.9 44.0 42.9 42.0

300 250 200 150 100 50 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 40.5 38.6

104

102

109

133

92

40.0 38.0

38.9

37.1

1.7

135

131

128

138

146

36.0 34.0

Source: Company, Angel Research

Source: Company, Angel Research

Investment arguments
RBIs move to deregulate NRE FD rates negative for the bank
One of the key differentiators for the bank was the lower cost of NRE deposits comprising ~14% of its total deposits (type of NRI deposits where interest income is tax-free and where RBI-regulated rates were as low as 3-4% until November 2011). However, following the RBIs recent deregulation, banks have increased NRE FD rates by almost 500bp, leaving negligible cost advantage from these deposits over domestic FD rates. Consequently, over a one-year period, as these deposits re-price upwards to the new interest rates, the banks NIMs could be impacted by up to 58bp (in the worst case scenario), posing a negative for the banks earnings outlook.

Asset quality to improve

During FY2011, the bank had witnessed elevated NPAs from its retail and SME loan book. However, management is taking various steps to stabilize its asset-quality woes (which are reflected in asset quality improvement in 4QFY2012 results and lower slippage levels in FY2012 compared to FY2011) and expects higher recoveries and lower slippages going forward, subject to the external environment.

May 15, 2012

Federal Bank | 4QFY2012 Result Update

Outlook and valuation

The banks valuations at 1.0x FY2014 ABV are higher than the 0.5-0.7x range at which mid-size PSU banks with similar KPIs are trading. While in the medium term, we expect a gradual increase in the banks leverage to lead to higher RoEs, higher valuations coupled with the diminished advantage of low-cost NRE deposits are likely to limit upside from current levels. Hence, we recommend a Neutral rating on the stock.

Exhibit 13: Key assumptions

Particulars (%) Credit growth Deposit growth CASA ratio NIMs Other income growth Growth in staff expenses Growth in other expenses Slippages Coverage ratio
Source: Angel Research

Earlier estimates FY2013 18.0 20.0 26.9 3.4 7.8 14.0 14.0 2.2 79.9 FY2014 20.0 20.0 25.4 3.3 15.9 14.0 14.0 2.2 79.5

Revised estimates FY2013 18.0 20.0 26.4 3.4 4.6 14.0 14.0 2.8 79.6 FY2014 20.0 20.0 24.9 3.3 16.0 14.0 14.0 2.5 78.6

Exhibit 14: Change in estimates

FY2013 Particulars (` cr) NII Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Angel Research

FY2014 Earlier estimates 2,502 661 3,163 1,259 1,904 456 1,449 470 979 Revised Var. (%) estimates 2,485 (0.7) 646 3,131 1,273 1,858 404 1,454 472 983 (2.3) (1.0) 1.1 (2.4) (11.4) 0.4 0.4 0.4

Earlier estimates 2,195 570 2,766 1,104 1,662 409 1,253 407 846

Revised Var. (%) estimates 2,186 (0.4) 557 2,743 1,116 1,627 369 1,258 408 850 (2.3) (0.8) 1.1 (2.1) (9.8) 0.4 0.4 0.4

May 15, 2012

Federal Bank | 4QFY2012 Result Update

Exhibit 15: P/ABV band

800 700 600 500 400 300 200 100 0 Price (`) 0.3x 0.6x 0.9x 1.2x 1.5x

Oct-06

Feb-09

Sep-09

Nov-10

May-07

Dec-07

Jun-11

Apr-10

Jan-12

Jul-08

Aug-12

Source: Company, Angel Research

May 15, 2012

Mar-06

Mar-13

Federal Bank | 4QFY2012 Result Update

Exhibit 16: Recommendation summary

Company AxisBk FedBk HDFCBk ICICIBk* SIB YesBk AllBk AndhBk BOB BOI BOM CanBk CentBk CorpBk DenaBk IDBI# IndBk IOB J&KBk OBC PNB SBI* SynBk UcoBk UnionBk UtdBk VijBk Reco. Buy Neutral Accumulate Buy Neutral Buy Accumulate Neutral Buy Buy Buy Buy Neutral Buy Buy Buy Accumulate Buy Accumulate Buy Buy Buy Buy Neutral Buy Buy Neutral CMP (`) 994 417 501 799 22 318 147 104 625 353 47 409 76 406 82 89 177 79 861 217 724 1,840 90 66 201 57 52 Tgt. price (`) 1,587 567 1,201 470 166 925 411 55 522 486 111 117 197 96 960 274 1,066 2,511 131 276 78 Upside (%) 59.6 13.2 50.3 47.6 13.0 48.1 16.3 17.3 27.7 19.7 35.9 30.7 10.8 21.3 11.5 25.9 47.3 36.5 45.4 37.3 37.0 FY2014E P/ABV (x) 1.3 1.0 2.9 1.3 1.0 1.6 0.6 0.6 0.7 0.7 0.6 0.7 0.7 0.5 0.5 0.5 0.7 0.5 0.8 0.5 0.7 1.1 0.5 0.6 0.7 0.4 0.6 FY2014E Tgt. P/ABV (x) 2.2 3.3 1.9 2.4 0.7 1.1 1.0 0.7 0.9 0.7 0.7 0.7 0.7 0.6 0.9 0.6 1.1 1.6 0.7 0.9 0.6 FY2014E FY12E-14E EPS P/E (x) CAGR (%) 7.1 7.1 14.1 9.9 5.8 7.7 3.5 4.1 4.2 4.5 3.6 4.4 3.7 3.6 3.1 3.7 4.1 3.7 4.4 3.4 4.1 6.8 3.0 3.7 4.0 2.5 4.3
#

FY2014E RoA (%) 1.5 1.3 1.7 1.5 0.8 1.4 0.9 0.9 1.1 0.8 0.7 0.9 0.5 0.8 0.9 0.9 1.1 0.6 1.4 0.8 1.0 1.0 0.8 0.6 0.8 0.7 0.5

FY2014E RoE (%) 20.3 14.5 22.1 16.0 17.5 23.3 17.6 16.0 18.2 16.9 17.2 16.4 14.4 16.5 17.0 14.8 16.9 13.9 18.6 14.3 18.1 19.1 17.1 15.4 17.5 16.5 13.7

16.4 12.5 27.0 20.4 4.5 22.5 6.2 3.3 11.1 23.3 45.3 11.8 100.1 5.3 6.6 22.7 4.8 28.3 8.8 27.7 10.3 23.6 17.3 13.0 24.8 22.5 13.5

Source: Company, Angel Research; Note: *Target multiples=SOTP target price/ABV (including subsidiaries); Without adjusting for SASF

May 15, 2012

Federal Bank | 4QFY2012 Result Update

Income statement
Y/E March (` cr) NII - YoY growth (%) Other income - YoY growth (%) Operating income - YoY growth (%) Operating expenses - YoY growth (%) Pre-prov. profit - YoY growth (%) Prov. & cont. - YoY growth (%) PBT - YoY growth (%) Prov. for taxation - as a % of PBT PAT - YoY growth (%) FY08 868 21.1 395 30.5 1,263 23.9 469 15.5 794 29.6 294 34.2 500 26.9 132 26.4 368 25.7 FY09 1,315 51.5 516 30.6 1,831 45.0 571 21.9 1,260 58.6 467 58.8 793 58.6 293 36.9 500 36.0 FY10 1,411 7.3 531 2.9 1,942 6.0 677 18.5 1,265 0.4 405 (13.2) 860 8.4 395 46.0 465 (7.2) FY11 1,747 23.8 517 (2.7) 2,263 16.6 836 23.5 1,427 12.8 525 29.6 902 4.9 315 34.9 587 26.4 FY12 1,953 11.8 532 3.0 2,486 9.8 979 17.1 1,507 5.6 337 (35.9) 1,170 29.7 393 33.6 777 32.3 FY13E 2,186 11.9 557 4.6 2,743 10.4 1,116 14.0 1,627 8.0 369 9.4 1,258 7.6 408 32.4 850 9.4 FY14E 2,485 13.6 646 16.0 3,131 14.1 1,273 14.0 1,858 14.2 404 9.5 1,454 15.6 472 32.4 983 15.6

Balance sheet
Y/E March (` cr) Share Capital Reserves & Surplus Deposits - Growth (%) Borrowings Tier 2 Capital Other Liab. & Prov. Total Liabilities Cash Balances Bank Balances Investments Advances - Growth (%) Fixed Assets Other Assets Total Assets - Growth (%) FY08 171 3,755 25,913 20.1 792 470 1,405 32,506 2,356 390 10,027 18,905 26.9 233 597 32,506 29.6 FY09 171 4,155 24.3 749 470 1,108 2,214 1,223 FY10 171 4,519 12.0 1,227 320 1,380 2,319 405 FY11 171 4,938 43,015 19.3 1,582 306 1,445 51,456 2,935 813 14,538 31,953 18.6 290 927 51,456 17.8 FY12 171 5,535 48,937 13.8 3,077 1,164 1,742 60,627 2,424 1,108 17,402 37,756 18.2 326 1,610 60,627 17.8 FY13E 171 6,206 20.0 3,645 1,164 1,907 2,349 1,313 FY14E 171 6,970 20.0 4,324 1,164 2,093 2,819 1,558

32,198 36,058

58,725 70,469

38,851 43,676

71,818 85,192

12,119 13,055 22,392 26,950 18.4 281 622 19.5 20.4 290 658 12.4

21,322 24,660 44,552 53,462 18.0 375 1,907 18.5 20.0 431 2,262 18.6

38,851 43,676

71,818 85,192

May 15, 2012

10

Federal Bank | 4QFY2012 Result Update

Ratio analysis
Y/E March Profitability ratios (%) NIMs Cost to Income Ratio RoA RoE B/S ratios (%) CASA Ratio Credit/Deposit Ratio CAR - Tier I Asset Quality (%) Gross NPAs Net NPAs Slippages Loan Loss Prov./Avg. Assets Provision Coverage Per Share Data (`) EPS ABVPS DPS Valuation Ratios PER (x) P/ABVPS (x) Dividend Yield DuPont Analysis (%) NII (-) Prov. Exp. Adj. NII Treasury Int. Sens. Inc. Other Inc. Op. Inc. Opex PBT Taxes RoA Leverage (x) RoE 3.0 1.0 2.0 0.3 2.3 1.1 3.4 1.6 1.7 0.5 1.3 10.7 13.8 3.7 1.3 2.4 0.2 2.6 1.2 3.8 1.6 2.2 0.8 1.4 8.7 12.2 3.4 1.0 2.4 0.3 2.7 1.0 3.7 1.6 2.1 1.0 1.1 9.2 10.3 3.7 1.1 2.6 0.1 2.7 1.0 3.7 1.8 1.9 0.7 1.2 9.7 12.0 3.5 0.6 2.9 0.1 3.0 0.8 3.8 1.7 2.1 0.7 1.4 10.4 14.4 3.3 0.6 2.7 0.1 2.8 0.8 3.6 1.7 1.9 0.6 1.3 11.0 14.1 3.2 0.5 2.7 0.0 2.7 0.8 3.5 1.6 1.9 0.6 1.3 11.6 14.5 18.9 1.8 1.0 13.9 1.6 1.2 15.0 1.5 1.2 11.8 1.4 2.1 8.9 1.2 2.2 8.2 1.1 2.2 7.1 1.0 2.7 21.5 229.2 4.0 29.3 252.6 5.0 27.2 273.9 5.0 34.3 298.3 8.5 45.4 333.3 9.0 49.7 372.5 9.0 57.4 417.2 11.0 2.4 0.2 1.7 0.7 90.8 2.6 0.3 3.0 1.0 88.4 3.0 0.5 3.3 1.0 84.3 3.5 0.6 3.2 1.0 83.4 3.3 0.5 3.6 0.4 84.7 2.9 0.6 2.8 0.5 79.6 2.5 0.5 2.5 0.4 78.6 25.1 73.0 22.5 19.1 24.5 69.5 20.2 18.4 26.2 74.7 18.4 16.9 26.9 74.3 16.8 15.6 27.5 77.2 18.1 14.8 26.4 75.9 16.8 14.0 24.9 75.9 15.7 13.2 3.1 37.1 1.3 13.8 3.8 31.2 1.4 12.2 3.5 34.9 1.1 10.3 3.8 36.9 1.2 12.0 3.6 39.4 1.4 14.4 3.4 40.7 1.3 14.1 3.3 40.6 1.3 14.5 FY08 FY09 FY10 FY11 FY12 FY13E FY14E

May 15, 2012

11

Federal Bank | 4QFY2012 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Federal Bank No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

May 15, 2012

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