Why Federal Bank Share Price is Rising

Like Yes Bank, shares of Federal Bank have also moved up in the past couple of days following a major update.

In the past 5 days, Federal Bank share price has moved up by 6% taking its YTD gains to over 20%.

What's propelling Federal Bank to such heights?

Let's delve deeper and explore the potential forces driving this remarkable rise.

#1 Strong Quarterly Update

Federal Bank reported a robust 20.1% year-on-year (YoY) growth in gross advances in the first quarter of FY25, reaching Rs 2,241.4 billion (bn). This growth was driven by increased demand for both retail and wholesale credit products amidst economic recovery efforts and strategic lending initiatives.

Total deposits also saw a significant uptick, growing by 19.6% YoY to Rs 2,660.8 bn.

Customer deposits, excluding interbank deposits and certificates of deposit, rose sharply to Rs 2,519.9 bn, up from Rs 2,104.2 bn as of 30 June 2023.

Gross advances expanded to Rs 2,241.4 bn from Rs 1,865.9 bn as of 30 June 2023, with retail credit growing by an impressive 25% and wholesale credit by 14%.

The current account savings account (CASA) deposits, a key indicator of low-cost funding for banks, amounted to Rs 779 bn. This 9.9% year-on-year increase and 5% quarter-on-quarter rise indicate Federal Bank's success in attracting stable and low-cost deposits amidst competitive market conditions.

Certificates of deposit grew to Rs 107 bn, up 16.6% YoY and 2.6% QoQ, while interbank deposits stood at Rs 33.9 bn, reflecting strong growth rates of 17.1% YoY and 62.7% QoQ.

The CASA ratio stood at 29.28% in Q1 FY25, compared to 31.9% in the previous year and 29.4% in the previous quarter.

#2 Speculations Over New MD and CEO

The other reason why shares are in focus is because Federal Bank has reportedly submitted three names to the Reserve Bank of India (RBI) for the position of MD and CEO.

The candidates include internal and external contenders. One of the external candidates is KVS Manian, a former Deputy Managing Director at Kotak Mahindra Bank.

According to reports, the potential candidates are Shalini Warrier and Harsh Dugar, both currently serving as executive directors at the bank.

Federal Bank has not yet made an official statement regarding these developments. Last month, Shyam Srinivasan, the current MD and CEO of Federal Bank, said that the lender's board has set up a search panel for evaluating candidates for the position.

What Next?

Federal Bank plans to continue expanding its presence. The focus is on deepening its roots in Karnataka, Telangana, and Andhra Pradesh to provide advanced financial services even in remote areas.

The top management anticipates annual growth of 15% to 18%, exceeding the expected 13% to 15% growth in India's banking credit. The bank aims to reach 1,500 branches by the end of FY25, building on its current 140 branches added in FY24.

The banking company also aims to bolster its presence in Mumbai and neighboring cities while expanding digitally and physically to sustain growth across commercial, corporate, and retail banking segments.

Looking forward, Federal Bank aims to manage margins effectively amidst challenging economic conditions, focusing on expanding margins through higher-yielding products and strategic business mixes in FY25.

How Federal Bank Share Price has Performed Recently

In the past five days, Federal Bank share price has rallied 5.9%. In the last month, it is up 14.2%.

In 2024, so far its share price has surged 20.2% and its up 40.6% in the last one year.

The stock touched its 52-week high of Rs 189.3 on 8 July 2024 and a 52-week low of Rs 126.5 on 13 July 2023.

About Federal Bank

Federal Bank is one of the major Indian commercial banks in the private sector headquartered in Aluva, Kerala.

The bank operates in four segments: treasury operations, wholesale banking, retail banking, and other banking operations.

Federal Bank also has its representative offices in Abu Dhabi and Dubai and an IFSC Banking Unit (IBU) in Gujarat International Finance Tec-City (GIFT City).

For more details about the company, you can have a look at the Federal Bank factsheet and quarterly results on our website.

You can also compare Federal Bank with its peers.

Federal Bank vs ICICI Bank

Federal Bank vs IDBI Bank

Federal Bank vs City Union Bank

And to know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy Investing

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...