3QFY2012 Result Update | Banking

January 30, 2012

Federal Bank
Performance Highlights

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

Source: Company, Angel Research

NEUTRAL
CMP Target Price
% chg (qoq)
11.3 15.9 5.6

`391 -

3QFY12
528 419 202

2QFY12
474 361 191

3QFY11
447 357 143

% chg (yoy)
18.1 17.4 41.1

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 6,696 1.0 477/322 50,813 10 16,863 5,087 FED.BO FB@IN

For 3QFY2012, Federal Bank reported 41.1% yoy (5.6% qoq) growth in its net profit to `202cr, in-line with our estimates. While the bank witnessed a sequential healthy growth in its operating income (12.6% qoq), higher provisioning expenses (up by 59.6% qoq) lowered profitability growth to 5.6% qoq. We remain Neutral on the stock. Asset quality surprises negatively: For 3QFY2012, the banks loan portfolio contracted by 1.2% qoq (up 17.6% yoy), while deposits shrunk by 1.1% qoq (up 26.6% yoy). The bank witnessed qoq contraction in all loan segments except retail (up 2.0% qoq). Gold loans continued to witness robust traction, growing by over `400cr during 3QFY2012, taking the overall proportion of gold loans (~`3,000cr as of 3QFY2012) to 9.0% of the overall loan book. The banks SA deposits grew by strong 9.0% qoq (up 25.5% yoy) and CA deposits grew by healthy 5.1% qoq (up 11.1% yoy), leading to a 247bp qoq improvement in CASA ratio to 28.2%. Including the NRE-TD (`1,125cr) and FCNR deposits (`1,552cr), low-cost deposits as of 3QFY2012 stood at 33.9% (31.3% in 2QFY2012). The banks reported NIM improved by 17bp qoq to 3.9% as the move towards higher yielding retail assets (particularly gold) during 3QFY2012 led to yield on advances rising by 17bp qoq to 12.9%. The banks slippages for 3QFY2012 surprised negatively, coming in at `330cr compared to `265cr witnessed in 2QFY2012. While higher retail slippages were the primary contributor to NPAs during 2QFY2012, slippages from large corporate (`193cr) accounted for 58% of the total slippages in 3QFY2012. High NPAs from the corporate side can be attributed to 5-6 chunky accounts (pertaining to sectors such as agri, textile, shipping and oil), which slipped during 3QFY2012. Outlook and valuation: Valuations at 1.1x FY2013 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, but 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 19.6 48.4 31.9

Abs. (%) Sensex Federal Bank

3m (5.3) (4.8)

1yr (8.0)

3yr 78.9

7.4 179.5

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 14.4 1.4 1.1 10.3

FY2011
1,747 23.8 587 26.4 3.8 34.3 11.4 1.3 1.2 12.0

FY2012E
1,995 14.2 766 30.5 3.6 44.8 8.7 1.2 1.4 14.2

FY2013E
2,121 6.3 792 3.4 3.2 46.3 8.4 1.1 1.2 13.2

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 | 3QFY2012 Result Update

Exhibit 1: 3QFY2012 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

3QFY12 2QFY12 % chg (qoq) 3QFY11 % chg (yoy) 1,467 1,084 367 10 5 939 528 138 122 67 16 28 28 666 247 138 109 419 115 92 23 303 102 202 33.5 1,368 1,050 310 6 2 893 474 117 103 70 14 14 19 591 230 128 102 361 72 57 7 8 289 98 191 33.9 7.2 3.3 18.4 78.9 169.2 5.1 11.3 17.9 18.9 (5.0) 11.2 102.9 47.0 12.6 7.4 8.0 6.8 15.9 59.6 61.5 240.3 (99.8) 5.0 3.8 5.6 (39)bp 1,022 795 221 4 1 575 447 122 113 69 8 39 5 569 212 120 92 357 142 128 2 13 214 71 143 33.2 43.5 36.4 66.0 132.4 271.6 63.4 18.1 13.3 7.8 (2.9) 90.4 (29.6) 430.9 17.1 16.5 15.5 17.8 17.4 (19.1) (27.9) 1,147.8 (99.8) 41.6 42.6 41.1 25bp

Exhibit 2: 3QFY2012 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 528 138 666 247 419 115 303 102 202

Estimates 510 126 636 245 391 90 301 98 203

Var. (%) 3.6 9.5 4.8 1.1 7.1 27.7 0.9 4.1 (0.6)

January 30, 2012

Federal Bank | 3QFY2012 Result Update

Exhibit 3: 3QFY2012 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 7.6 12.9 7.8 7.6 3.9 37.1 1,363 4.0 244 0.7 82.1 4.1 0.6 7.4 12.7 7.2 7.6 3.8 38.9 1,250 3.6 196 0.6 84.3 3.3 0.4 13bp 17bp 55bp (2)bp 17bp (178)bp 9.1 36bp 24.5 16bp (222)bp 81bp 22bp 6.0 11.1 7.0 6.1 4.3 37.3 1,153 4.0 227 0.8 80.3 4.8 1.1 154bp 185bp 76bp 149bp (37)bp (18)bp 18.3 2bp 7.3 (7)bp 183bp (63)bp (49)bp 33,206 46,742 71.0 2,084 11,102 13,186 28.2 15.9 15.0 33,607 47,263 71.1 1,983 10,183 12,166 25.7 15.1 14.0 (1.2) (1.1) (6)bp 5.1 9.0 8.4 247bp 86bp 94bp 28,240 36,914 76.5 1,877 8,843 10,720 29.0 16.4 15.2 17.6 26.6 (546)bp 11.1 25.5 23.0 (83)bp (51)bp (23)bp 3QFY12 2QFY12 % chg (qoq) 3QFY11 % 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

Loan portfolio contracts sequentially

For 3QFY2012, the banks loan portfolio contracted by 1.2% qoq (up 17.6% yoy) to `33,206cr, while deposits shrunk by 1.1% qoq (up 26.6% yoy) to 46,742cr. The bank witnessed qoq contraction in all loan segments (agri 4.5%, SME 1.1% and corporate 2.9%) except retail, which managed to grow by 2.0% qoq. Gold loans continued to witness robust traction, growing by over `400cr during 3QFY2012, taking the overall proportion of gold loans (`3,000cr as of 3QFY2012) to 9.0% 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. The banks saving account deposits grew by strong 9.0% qoq (up 25.5% yoy) and current account deposits grew by healthy 5.1% qoq (up 11.1% yoy), leading to a 247bp improvement in CASA ratio to 28.2%. Including the NRE-TD (`1,125cr) and FCNR deposits (`1,552cr), low-cost deposits as of 3QFY2012 stood at 33.9% (31.3% in 2QFY2012). Post the RBIs deregulation of NRE term and saving deposits rates in December 2011, Federal Bank has increased the rate on NRE term deposits to 9.5% (from

January 30, 2012

Federal Bank | 3QFY2012 Result Update

~3.8% before deregulation), while keeping the saving account rate constant at 4% effective January 17, 2012. Consequently, we expect cost of funds for the bank to come under pressure from 4QFY2012, as these NRE term deposits re-price upwards and a part of NRE saving account deposits shift into higher-yielding NRE term deposits. Considering the erosion of low-cost advantage of these NRE deposits, we have factored in a margin compression of ~40bp in FY2013 over FY2012.

Exhibit 4: Loan portfolio contracts sequentially

Adv. qoq chg (% ) 20.0 Dep. qoq chg (%) CDR (%, RHS) 80.0

Exhibit 5: CASA ratio improves during 3QFY2012

(%) 30.0 28.5 27.2 27.0 25.5 24.0 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 26.3 25.7 29.0 28.2

12.0 8.0

76.5

10.1

16.0

13.1 16.5

78.0 76.0 74.0 71.0 3QFY12 72.0 70.0

2.2 2.2

0.1

4.0 (4.0)

5.1
71.1

74.3

74.5

3QFY11

4QFY11

1QFY12

2QFY12

Source: Company, Angel Research

(1.2) (1.1)

(0.2)

Source: Company, Angel Research

The bank reported NIM improved by 17bp qoq to 3.9%, as the move towards higher-yielding retail assets (particularly gold) during 3QFY2012 led to yield on advances rising by 17bp qoq to 12.9%. Also, the bank shed ~`2,000cr of highcost deposits, which led to a lower rise of 13bp in cost of deposits to 7.6%.

Exhibit 6: Yield on advances rises on high retail lending

(%) 14.00 13.00 12.00 11.00 10.00 9.00 8.00 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 11.06 11.09 12.74 11.98 12.91

Exhibit 7: NIM rises by 17bp during 3QFY2012

(% ) 4.40 4.20 4.00 3.80 3.60 3.40 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12

4.31 4.00 3.87 3.77

3.94

Source: Company, Angel Research

Source: Company, Angel Research

Higher forex and treasury income drives other income

During 3QFY2012, growth in core fee income remained muted; however, treasury and forex income witnessed healthy traction, leading to 13.3% yoy growth in noninterest income. While treasury income (`16cr) nearly doubled on a yoy basis, forex income increased more than four times to `28cr. Higher forex income for the bank was on account of increased merchant forex volumes and trading gains during 3QFY2012.

January 30, 2012

Federal Bank | 3QFY2012 Result Update

Slippages surprise negatively

The banks slippages for 3QFY2012 surprised negatively coming in at `330cr (annualized slippage ratio of 4.1%) compared to `265cr witnessed in the last quarter. While higher retail slippages due to one-off employee-related issues were the primary contributor to slippages during 2QFY2012, slippages from large corporate (`193cr) accounted for 58% of the total slippages in 3QFY2012. High NPAs from the corporate side can be attributed to 5-6 chunky accounts (pertaining to sectors such as agri, textile, shipping and oil), which slipped during the quarter. Absolute gross NPAs increased by 9.1% qoq to `1,363cr, while net NPAs increased by 24.5% qoq to `244cr. Gross and net NPA ratios deteriorated to 4.0% and 0.7% as against 3.6% and 0.6%, respectively, in 2QFY2012. The banks total restructuring book as of 3QFY2012 stands at `1,438cr (4.3% of the overall loan book). Management is expecting restructuring of some aviation and SEB accounts (Rajasthan SEB) worth ~`480cr during 4QFY2012 (an expected 33.3% qoq increase).

Exhibit 8: NPA amounts reduce sequentially

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

Exhibit 9: Credit costs up again in 3QFY2012

95.0 90.0 85.0 1.2 1.0 0.8 0.6 0.4 0.2 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 0.7 0.4 1.1 0.9 0.6

1,500 1,200 900 600 88.3 83.4 80.4 83.0 80.5

80.0 75.0 70.0 65.0 60.0

1,153 227

1,148 191

1,300 236

1,250 196

300 -

3QFY11 4QFY11 1QFY12 2QFY12 3QFY12

Source: Company, Angel Research

1,363 244

Source: Company, Angel Research

Exhibit 10: Cost-to-income ratio under control

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

Exhibit 11: Opex-to-avg. assets stable for 3QFY2012

(%) 2.0 1.9 1.8 1.7 1.6 1.5 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 1.9 1.7 1.7 2.0 41.0 40.0

300 250 200 150 100 50 3QFY11

40.5

104

92

38.6

102

92

109

38.9

39.0 38.0 37.0 36.0 35.0

37.3

37.1

1.7

120

135

131

128

4QFY11

1QFY12

2QFY12

3QFY12

Source: Company, Angel Research

138

Source: Company, Angel Research

January 30, 2012

Federal Bank | 3QFY2012 Result Update

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 ~12% 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 recently). 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 45bp, 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 assetquality woes (which is reflected in the asset quality improvement in 2QFY2012 results) and expects higher recoveries and lower slippages going forward, subject to the external environment.

Outlook and valuation

Old private bank stocks such as Federal Bank have outperformed since the RBIs intention of awarding more bank licenses, potentially due to increased M&A expectations (leading to inadequate margin of safety at current valuations in our view). Valuations at 1.1x FY2013 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.

January 30, 2012

Federal Bank | 3QFY2012 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 Coverage ratio
Source: Angel Research

Earlier estimates FY2012 16.0 17.0 26.4 3.5 (2.5) 13.0 17.0 2.4 82.6 FY2013 18.0 19.0 25.6 3.1 12.1 15.0 15.0 2.1 80.1

Revised estimates FY2012 16.0 17.0 26.4 3.6 (0.1) 14.0 17.0 2.5 82.6 FY2013 18.0 19.0 25.6 3.2 9.4 15.0 15.0 2.1 80.1

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 2,045 565 2,610 1,103 1,507 397 1,110 360 750 Revised Var. (%) estimates 2,121 565 2,686 1,108 1,578 405 1,173 381 792 3.7 2.9 0.5 4.7 1.8 5.7 5.7 5.7

Earlier estimates 1,938 504 2,442 959 1,483 392 1,091 354 737

Revised Var. (%) estimates 1,995 516 2,512 964 1,548 413 1,134 368 766 2.9 2.4 2.8 0.5 4.3 5.4 4.0 4.0 4.0

Exhibit 14: P/ABV band

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

Dec-03

Dec-10

Jul-04

Apr-06

Aug-08

Mar-02

Mar-09

Oct-02

Oct-09

Jul-11

Feb-05

Nov-06

Sep-05

May-03

Source: Company, Angel Research

January 30, 2012

May-10

Feb-12

Jun-07

Jan-08

Federal Bank | 3QFY2012 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 Reco. Buy Neutral Accumulate Buy Neutral Buy Neutral Neutral Buy Neutral Accumulate Accumulate Neutral Accumulate Neutral Accumulate Neutral Accumulate Neutral Neutral Accumulate Buy Accumulate Neutral Neutral Accumulate Neutral CMP (`) 1,024 391 479 852 22 314 156 100 740 336 47 455 84 402 66 97 213 86 811 250 956 1,991 92 66 215 65 55 Tgt. price (`) 1,361 516 1,061 367 907 53 510 450 107 94 1,059 2,359 106 70 Upside (%) 33.0 7.8 24.6 16.8 22.4 13.4 12.0 11.9 10.2 8.8 10.8 18.5 15.0 6.9 FY2013E P/ABV (x) 1.65 1.1 3.25 1.6 1.1 2.0 0.7 0.7 1.0 1.1 0.7 0.9 0.7 0.7 0.5 0.6 0.9 0.6 0.8 0.6 1.1 1.6 0.6 0.8 0.9 0.6 0.8 FY2013E Tgt. P/ABV (x) 2.2 3.5 2.0 2.3 1.3 0.8 1.1 0.8 0.7 0.6 1.2 1.9 0.7 0.7 FY2013E FY11E-13E EPS P/E (x) CAGR (%) 8.9 8.4 16.7 13.4 6.7 10.4 4.3 4.9 5.7 7.4 4.8 5.8 5.3 4.4 3.4 4.8 5.1 4.3 4.8 5.7 5.9 9.6 3.9 4.3 5.5 4.5 5.8
#

FY2013E RoA (%) 1.5 1.2 1.8 1.3 0.9 1.4 0.9 0.8 1.1 0.6 0.7 0.8 0.4 0.8 0.8 0.7 1.2 0.5 1.4 0.7 1.0 0.8 0.7 0.6 0.7 0.6 0.5

FY2013E RoE (%) 20.2 13.2 21.0 14.4 17.5 20.6 17.6 14.6 19.3 13.3 16.9 15.8 11.4 15.5 14.9 13.4 18.4 13.0 18.6 11.1 19.7 17.9 16.5 15.4 15.4 12.1 11.6

18.2 16.2 30.4 19.2 13.5 20.1 9.6 (4.8) 9.8 0.1 26.3 (7.0) (24.3) (1.8) 2.4 9.9 3.8 7.1 14.9 (7.4) 7.3 26.0 13.7 10.9 (0.3) 4.3 4.1

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

January 30, 2012

Federal Bank | 3QFY2012 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 1,995 14.2 516 (0.1) 2,512 11.0 964 15.3 1,548 8.4 413 (21.3) 1,134 25.8 368 32.4 766 30.5 FY13E 2,121 6.3 565 9.4 2,686 7.0 1,108 15.0 1,578 1.9 405 (2.2) 1,173 3.4 381 32.4 792 3.4

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 1,582 306 1,445 51,456 2,935 813 14,538 31,953 18.6 290 927 51,456 17.8 FY12E 171 5,545 17.0 3,121 677 1,651 3,271 1,230 FY13E 171 6,168 19.0 3,682 677 1,966 3,893 1,451

25,913 32,198

50,327 59,889

32,506 38,851

61,491 72,554

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

18,480 21,780 37,066 43,738 16.0 336 1,108 19.5 18.0 384 1,308 18.0

32,506 38,851

61,491 72,554

January 30, 2012

Federal Bank | 3QFY2012 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 3.5 0.7 2.8 0.1 2.9 0.8 3.7 1.7 2.0 0.7 1.4 10.4 14.2 3.2 0.6 2.6 0.0 2.6 0.8 3.4 1.7 1.8 0.6 1.2 11.1 13.2 11.4 2.2 1.0 18.2 1.7 1.0 13.4 1.5 1.3 14.4 1.4 1.3 11.4 1.3 2.2 8.7 1.2 2.0 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 44.8 333.8 8.0 46.3 370.3 8.5 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 3.1 0.5 2.5 0.6 82.6 2.7 0.5 2.1 0.5 80.1 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 26.9 74.3 16.8 15.6 26.4 73.6 16.6 14.6 25.6 73.0 15.5 13.8 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 3.6 38.4 1.4 14.2 3.2 41.3 1.2 13.2 FY07 FY08 FY09 FY10 FY11 FY12E FY13E

January 30, 2012

10

Federal Bank | 3QFY2012 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%)

January 30, 2012

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