1QFY2012 Result Update | Banking

August 3, 2011

Federal Bank
Performance Highlights

Particulars (` cr) NII Pre-prov. profit PAT

Source: Company, Angel Research

BUY
CMP Target Price
% chg (qoq)
2.7 1.1 (14.9)

`406 `478
12 Months

1QFY12
460 354 146

4QFY11
448 350 172

1QFY11
413 335 132

% chg (yoy)
11.2 5.6 10.8

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 6,944 1.0 501/322 86,476 10 17,941 5,405 FED.BO FB@IN

For 1QFY2012, Federal Bank recorded net profit growth of 10.8% yoy (down 14.9% qoq), below our estimates, mostly due to higher provisioning expenses than built in by us. Management has attributed the rise in NPAs (slippages at `323cr) during the quarter to one-off employee-related issues, which led to a spurt in slippages in the retail book. Fee income according to management also suffered due to this one-off event. We recommend a Buy rating on the stock. CASA ratio improves; however, asset-quality woes continue: For 1QFY2011, advances grew by 0.1% qoq to `31,972cr, while deposits declined by 0.2% qoq to `42,936cr. Although total deposits declined during the quarter, the bank was able to sequentially grow its savings and current account deposits by 3.5% and 4.2%, respectively, leading to a 96bp increase in CASA ratio to 27.2%. Including NRE deposits, total low-cost deposits constituted 32.8% of total deposits. Cost of deposits increased by 103bp qoq, leading to a 13bp qoq decline in reported NIM to 3.9%. Slippages for 1QFY2012 stood at `343cr (annualised 4.0%), driven by higher slippages on the retail (~`140cr) and SME (~`140cr) front. Management has attributed the increase in slippages on the retail side to one-off employeerelated issues that cropped up during the quarter, leading to slackness on the recovery front. During 1QFY2012, non-interest income declined by 17.2% qoq (up 6.4% yoy), mainly due to sluggishness in fee-related initiatives and recoveries on the retail side (recoveries were down by 42.6% qoq), as per management. Outlook and valuation: Post the recent correction, the stock is trading at 1.1x FY2013E ABV. While lower leverage is leading to low RoE at present, the banks core RoA is relatively high and should improve further as asset-quality pressures start moderating. We recommend Buy on the stock with a target price of `478.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 0.0 21.1 47.0 31.9

Abs. (%) Sensex Federal Bank

3m (3.2)

1yr (1.0)

3yr 23.1 95.3

(0.5) 17.9

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

FY2010
1,411 7.3 465 (7.2) 3.5 27.2 15.0 1.5 1.1 10.3

FY2011
1,747 23.8 587 26.4 3.8 34.3 11.8 1.4 1.2 12.0

FY2012E
1,911 9.4 673 14.6 3.5 39.4 10.3 1.2 1.2 12.5

FY2013E
2,156 12.8 831 23.5 3.3 48.6 8.4 1.1 1.2 13.9

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

Shrinivas Bhutda
022 3935 7800 Ext: 6845 shrinivas.bhutda@angelbroking.com

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

Please refer to important disclosures at the end of this report

Federal Bank | 1QFY2012 Result Update

Exhibit 1: 1QFY2012 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 - Others 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

1QFY12 4QFY11 % chg (qoq) 1QFY11 % chg (yoy) 1,245 977 260 6 2 785 460 117 101 31 16 23 46 577 223 131 92 354 134 114 15 5 220 74 146 33.6 1,100 857 239 3 1 652 448 141 134 26 7 42 67 589 239 135 104 350 79 83 6 (9) 271 99 172 36.6 13.2 14.0 8.8 132.8 16.1 20.3 2.7 (17.2) (24.9) 21.5 132.7 (44.1) (30.8) (2.1) (6.7) (3.0) (11.5) 1.1 68.7 38.3 171.9 (18.7) (25.4) (14.9) (302)bp 952 745 204 2 1 538 413 110 93 31 17 18 44 523 188 105 83 335 133 136 (4) 2 202 70 132 34.7 30.8 31.2 27.3 192.4 88.0 45.8 11.2 6.4 8.1 (0.7) (3.1) 27.1 6.4 10.2 18.5 25.0 10.3 5.6 0.5 (15.9) 173.7 8.9 5.4 10.8 (114)bp

Exhibit 2: 1QFY2012 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 460 117 577 223 354 134 220 74 146

Estimates 463 133 596 226 370 111 258 84 174

Var. (%) (0.6) (12.1) (3.2) (1.5) (4.2) 20.3 (14.8) (11.8) (16.2)

August 3, 2011

Federal Bank | 1QFY2012 Result Update

Exhibit 3: 1QFY2012 performance

Particulars Balance sheet Advances (` cr) Deposits (` cr) Credit-to-Deposit Ratio (%) Current deposits (` cr) Saving deposits (` cr) CASA deposits (` cr) CASA ratio (%) CAR (%) Tier 1 CAR (%) Profitability Ratios (%) Cost of deposits Yield on advances 7.0 12.0 6.0 11.1 103bp 89bp 5.8 10.8 120bp 117bp 31,972 42,936 74.5 2,247 9,451 11,698 27.2 15.6 31,953 43,015 74.3 2,157 9,148 11,305 26.3 16.8 15.6 0.1 (0.2) 18bp 4.2 3.3 3.5 96bp (1679)bp (7)bp 27,144 34,984 77.6 1,892 8,254 10,146 29.0 17.9 16.6 17.8 22.7 (313)bp 18.8 14.5 15.3 (176)bp (1789)bp (99)bp 1QFY12 4QFY11 % chg (qoq) 1QFY11 % chg (yoy)

Yield on investments
Cost of funds 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

6.9
7.1 3.9 38.6 1,300 3.9 236 0.7 81.9 4.0 0.9

7.0
6.4 4.0 40.5 1,148 3.5 191 0.6 83.4 4.3 0.7

(2)bp
71bp (13)bp (192)bp 13.2 45bp 23.6 14bp (153)bp (429)bp 20bp

6.8
5.9 4.2 35.9 1,044 3.7 201 0.7 80.8 4.9 1.3

15bp
118bp (30)bp 270bp 24.5 21bp 17.5 0bp 109bp (485)bp (38)bp

Advances and deposits remain flat qoq

For 1QFY2011, advances and deposits remained flat on a qoq basis. Advances grew by 0.1% qoq (up 17.8% yoy) to `31,972cr, while deposits declined by 0.2% qoq (up by a strong 22.7% yoy) to `42,936cr. On a yoy basis, retail loans recorded 9.5% growth, SME loans grew by 15.5% and corporate loans grew by strong 26.5% during the quarter. Although total deposits declined during the quarter, the bank was able to sequentially grow its savings and current account deposits by 3.5% and 4.2%, respectively (healthy 15.3% and 18.8% on an annualised basis), leading to a 96bp increase in CASA ratio to 27.2%. Including NRE deposits, total low-cost deposits constituted 32.8% of total deposits. The banks branch network as of 1QFY2012 comprised 746 branches and 816 ATMs. The bank plans to open another 250 branches during FY2012, mainly in Gujarat, Maharashtra, Punjab, Karnataka and Tamil Nadu in addition to Kerala.

August 3, 2011

Federal Bank | 1QFY2012 Result Update

Exhibit 4: Sequential contraction in business

Adv. qoq chg (% ) 20.0 16.0 12.0 8.0 77.6 76.5 76.5 Dep. qoq chg (%) CDR (%, RHS) 80.0 78.0 74.5 76.0 74.0

Exhibit 5: CASA improves to 27.2% as of 1QFY2012

(%) 30.0 28.5 27.2 27.0 25.5 24.0 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 26.3 29.0 29.4 29.0

0.7

3.2

0.1

4.0 (4.0)

1.8

2.2 2.2

13.1 16.5
74.3

72.0

(3.0)

1QFY11 2QFY11 3QFY11 4QFY11 1QFY12

(0.2)

70.0

Source: Company, Angel Research

Source: Company, Angel Research

Most of the banks loan book is on a floating basis, which led to a sharp rise in yield in advances by 89bp qoq to 12.0% in 1QFY2012. However, the cost of deposits also rose by 103bp qoq, leading to a sequential 13bp decline in reported NIM to 3.9%. The bank is guiding for NIM to be at 3.753.80% for FY2012.

Exhibit 6: Rise in cost of deposits by 103bp qoq

(%) 7.50 7.00 6.50 6.00 5.50 5.00 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 5.82 5.88 6.03 5.99 7.02

Exhibit 7: NIM compresses by 13bp qoq

(%) 4.50 4.20 3.90 3.60 3.30 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 4.17 4.00 3.87 4.44 4.31

Source: Company, Angel Research

Source: Company, Angel Research

Operating expenses decline qoq

For 1QFY2011, the banks operating expenses decreased by 6.7% qoq (up 18.5% yoy) to `223cr. During 1QFY2012, the bank made provisions of `8cr related to pension expenses for serving employees; however, employee expenses declined by 3.0% qoq to `131cr on account of a high base, owing to pension expenses for retired employees, in 4QFY2011.

August 3, 2011

Federal Bank | 1QFY2012 Result Update

Exhibit 8: Operating expenses decline sequentially

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

Exhibit 9: Improvement in opex-to-avg. assets for 1QFY12

2.0 1.9 1.8 1.7 1.6 1.5 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 1.7 1.9 1.8 1.7 2.0

300 250 200 150 100 50 37.3

40.5 38.6

42.0 40.0 38.0 36.0 34.0 32.0 30.0

77

83

33.9

105

121

120

92

135

1QFY11 2QFY11 3QFY11 4QFY11 1QFY12

Source: Company, Angel Research

131

92

35.9

104

Source: Company, Angel Research

Asset quality woes continue; employee-related issues push up retail slippages

Slippages for 1QFY2012 stood at `343cr (annualised 4.0%), driven by higher slippages on the retail (~`140cr) and SME (~`140cr) front. Management has attributed the increase in slippages on the retail side (usual run-rate of `50cr60cr) to one-off employee-related issues that cropped up during the quarter, leading to slackness on the recovery front. Absolute gross NPAs increased by 13.2% qoq to `1,300cr. Net NPAs increased by 23.6% qoq to `236cr. Gross and net NPA ratios deteriorated to 3.9% and 0.7% as against 3.5% and 0.6%, respectively, in 4QFY2011. Management is confident of bringing retail side slippages to the pre-1QFY2012 level of `50cr60cr and expects slippages of ~`200cr for 2QFY2012. We estimate the slippage ratio for FY2012 and FY2013 to be 3.0% and 2.2%, respectively.

Exhibit 10: Asset-quality pressures persist

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

Exhibit 11: Higher credit cost for 1QFY2012

95.0 1.6 1.3 1.2 0.8 0.4 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12

1,500 1,200 900 600 88.4 92.0 88.3 83.4 80.4

90.0 85.0 80.0 75.0 70.0 65.0 60.0

1.3 1.1 0.9 0.7

1,044 201

1,094 186

1,153 227

1,148 191

300 -

1QFY11 2QFY11 3QFY11 4QFY11 1QFY12

Source: Company, Angel Research

1,300 236

Source: Company, Angel Research

Non-interest income also affected by employee-specific concerns

During 1QFY2012, non-interest income declined by 17.2% qoq (up by 6.4% yoy), mainly on account of sluggishness in fee-related initiatives and recoveries on the retail side (recoveries down 42.6% qoq), as indicated by the management. Management claims these one-off issues have been sorted out and 2QFY2012 is expected to be better on the non-interest income front for the bank. Also, management has maintained its guidance of 2530% growth in fee income for FY2012.
August 3, 2011

Federal Bank | 1QFY2012 Result Update

Investment arguments
Healthy deposit mix
Federal Banks CASA deposits grew at a 20.3% CAGR during FY200511, leading to a stable 25%+ CASA ratio. Further, a key differentiator for the bank is the low-cost NRI deposits base, which constitutes ~5.6% of total deposits. Thus, effectively, low-cost deposits as a proportion of total deposits stand at around 32.8% as of 1QFY2012, which are expected to underpin calculated NIM of about 3.5% in FY2012E, even as the bank grows its advances faster than the industry to leverage its large net worth.

Asset quality to improve

During FY2011, the bank had witnessed NPAs from its retail loan book due to the impact of Dubai crisis on the banks substantial Middle East NRI clients. Also, while the banks slippages from the SME sector have been at elevated levels in the past few quarters, part of the high credit costs are compensated by the banks relatively high yield on advances. Slippages in 1QFY2012 were also hit due to one-off employee-specific delays; however, management is also taking various steps to stabilise its asset-quality woes (as reflected in the CEOs focus on improving processes). With the introduction of Performance Management systems (PMS) for employees, high incentives for top performers and launch of stock option programmes, we expect the resultant enhancement in productivity to translate into improved asset quality and earnings for the bank in the future. Also, as indicated by the management, the bank is expecting faster recoveries and lower slippages going forward, subject to the external environment. We have factored in NPA provisioning expenses at 0.8% of average assets for FY2012E as against 1.0% in FY2011. We expect this to come down to 0.6% in FY2013E, aiding improvement in RoE to 13.9%

Outlook and valuation

Post the recent correction, the stock is trading at 1.1x FY2013E ABV. While lower leverage is leading to low RoE at present, the banks core RoA is relatively high and should improve further as asset-quality pressures start moderating. We recommend a Buy rating on the stock with a target price of `478.

August 3, 2011

Federal Bank | 1QFY2012 Result Update

Exhibit 12: Key assumptions

Particulars (%) Credit growth Deposit growth CASA ratio NIMs Other income growth Growth in staff expenses Growth in other expenses Slippages Treasury gain/(loss) (% of investments)
Source: Angel Research

Earlier estimates FY2012 20.0 20.0 25.2 3.5 11.9 15.0 15.0 2.7 0.2 FY2013 20.0 20.0 24.2 3.2 16.1 15.0 15.0 2.2 0.2

Revised estimates FY2012 20.0 20.0 25.2 3.5 3.7 15.0 15.0 3.0 0.2 FY2013 20.0 20.0 24.2 3.3 16.1 15.0 15.0 2.2 0.2

Exhibit 13: Change in estimates

FY2012 Particulars (` cr) NII Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Angel Research

FY2013 Earlier estimates 2,134 671 2,805 1,106 1,700 443 1,256 408 849 Revised Var. (%) estimates 2,156 622 2,778 1,106 1,672 442 1,230 399 831 1.0 (7.3) (1.0) (1.6) (0.4) (2.1) (2.1) (2.1)

Earlier estimates 1,920 578 2,498 962 1,536 446 1,091 354 737

Revised Var. (%) estimates 1,911 536 2,447 962 1,485 489 996 323 673 (0.5) (7.3) (2.0) (3.3) 9.6 (8.6) (8.6) (8.6)

Exhibit 14: P/ABV band

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

Oct-02

Feb-05

Oct-09

May-03

Nov-06

May-10

Dec-03

Dec-10

Mar-02

Aug-08

Source: Company, Angel Research

August 3, 2011

Mar-09

Feb-12

Sep-05

Jun-07

Jan-08

Jul-04

Apr-06

Jul-11

Federal Bank | 1QFY2012 Result Update

Exhibit 15: 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 Buy Buy Accumulate Buy Buy Accumulate Neutral Neutral Buy Buy Buy Buy Neutral Buy Neutral Neutral Buy Buy Neutral Accumulate Accumulate Buy Buy Neutral Buy Buy Neutral Reco. CMP (`) 1,308 406 482 1,002 23 307 197 134 875 373 54 427 110 488 84 125 217 133 883 338 1,093 2,279 117 81 278 90 62 Tgt. price (`) 1,648 478 519 1,324 26 353 1,018 434 65 516 608 255 155 383 1,217 2,845 139 327 107 Upside (%) 26.0 17.7 7.7 32.2 15.1 14.8 16.4 16.2 19.6 20.8 24.5 17.4 16.3 13.2 11.4 24.9 19.0 17.7 18.7 FY2013E P/ABV (x) 2.1 1.1 3.3 1.8 1.2 2.0 0.9 0.9 1.2 1.0 0.7 0.8 0.8 0.8 0.6 0.8 0.9 0.8 0.9 0.8 1.3 1.7 0.8 0.9 1.0 0.8 0.8 FY2013E Tgt. P/ABV (x) 2.7 1.3 3.5 2.4 1.4 2.3 1.4 1.2 0.9 1.0 1.0 1.0 1.0 0.9 1.4 2.1 0.9 1.2 0.9 FY2013E FY11E-13E EPS P/E (x) CAGR (%) 10.8 8.4 16.8 14.2 7.0 10.3 5.5 6.0 6.6 5.8 5.1 4.9 5.3 4.5 4.0 5.8 4.6 5.1 5.9 5.7 6.8 8.4 4.9 4.7 5.9 6.0 6.7
#

FY2013E RoA (%) 1.5 1.2 1.7 1.5 0.9 1.2 0.9 0.9 1.1 0.8 0.6 0.9 0.5 0.9 0.8 0.7 1.4 0.7 1.2 0.9 1.0 1.1 0.7 0.6 0.8 0.5 0.4

FY2013E RoE (%) 21.0 13.9 20.9 16.0 17.2 20.6 17.8 15.9 19.6 18.0 14.8 17.2 14.4 17.9 16.5 14.3 20.4 16.4 17.0 14.4 20.0 22.6 17.0 17.1 17.9 12.5 11.7

20.9 19.0 30.5 25.8 11.6 19.1 9.2 (0.6) 10.8 18.7 30.8 (2.4) (14.0) 6.1 7.0 13.0 10.4 22.4 8.8 7.5 7.4 44.2 14.6 16.5 20.0 6.1 61.9

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

August 3, 2011

Federal Bank | 1QFY2012 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 (%) FY07 717 19.5 303 29.8 1,019 22.4 406 6.7 613 35.6 219 27.8 394 40.3 101 25.7 293 30.0 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 FY12E 1,911 9.4 536 3.7 2,447 8.1 962 15.0 1,485 4.1 489 (7.0) 996 10.5 323 32.4 673 14.6 FY13E 2,156 12.8 622 16.1 2,778 13.5 1,106 15.0 1,672 12.6 442 (9.6) 1,230 23.5 399 32.4 831 23.5

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 (%) FY07 86 1,417 21,584 20.7 770 470 763 25,090 1,232 1,082 7,033 14,899 26.9 186 659 25,090 21.5 FY08 171 3,755 20.1 792 470 1,405 2,356 390 FY09 171 4,155 24.3 749 470 1,108 2,214 1,223 FY10 171 4,519 36,058 12.0 1,227 320 1,380 43,676 2,319 405 13,055 26,950 20.4 290 658 43,676 12.4 FY11 171 4,938 43,015 19.3 1,324 564 1,445 51,456 2,935 813 14,538 31,953 18.6 290 927 51,456 17.8 FY12E 171 5,472 20.0 1,584 677 2,042 3,355 1,231 FY13E 171 6,124 20.0 1,885 677 2,424 4,026 1,464

25,913 32,198

51,618 61,941

32,506 38,851

61,564 73,221

10,027 12,119 18,905 22,392 26.9 233 597 29.6 18.4 281 622 19.5

17,187 20,010 38,344 46,013 20.0 336 1,109 19.6 20.0 388 1,320 18.9

32,506 38,851

61,564 73,221

August 3, 2011

Federal Bank | 1QFY2012 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 3.1 1.0 2.2 0.2 2.4 1.1 3.5 1.8 1.7 0.4 1.3 16.7 21.4 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 3.4 0.9 2.5 0.1 2.6 0.9 3.5 1.7 1.8 0.6 1.2 10.5 12.5 3.2 0.7 2.5 0.1 2.6 0.9 3.5 1.6 1.8 0.6 1.2 11.3 13.9 11.9 2.3 1.0 18.9 1.8 1.0 13.9 1.6 1.2 15.0 1.5 1.2 11.8 1.4 2.1 10.3 1.2 1.7 8.4 1.1 2.2 34.2 133.4 4.0 21.5 229.2 4.0 29.3 252.6 5.0 27.2 273.9 5.0 34.3 298.3 8.5 39.4 329.5 7.0 48.6 367.7 9.0 2.9 0.4 1.5 0.4 85.6 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 3.0 0.7 3.0 0.8 78.4 2.6 0.6 2.2 0.6 75.7 25.2 69.0 13.4 8.9 25.1 73.0 22.5 19.1 24.5 69.5 20.2 18.4 26.2 74.7 18.4 16.9 26.3 74.3 16.7 15.6 25.2 74.3 14.8 13.0 24.2 74.3 13.8 12.2 3.2 39.8 1.3 21.4 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 3.5 39.3 1.2 12.5 3.3 39.8 1.2 13.9 FY07 FY08 FY09 FY10 FY11 FY12E FY13E

August 3, 2011

10

Federal Bank | 1QFY2012 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%)

August 3, 2011

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