Bank Stock Extends Gains To 5th Day, Brokerages Divided

Shares of Federal Bank extended gains for the fifth straight session after the private sector lender posted its business update for the quarter ended March.

What Happened: Federal Bank reported a growth in its gross advances, which surged by 20% year-on-year to reach ₹2.13 lakh crore as of March 31, 2024, compared to ₹1.77 lakh crore in the previous year.

The bank highlighted that its retail credit book witnessed a significant growth of 25%, while the wholesale credit book also expanded at a slightly slower rate of 15%. The retail loan-to-wholesale loan ratio stands at 56:44.

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In terms of deposits, Federal Bank saw its total deposits reaching ₹2.53 lakh crore by the end of March 31, 2024. This represents an 18% growth compared to ₹2.13 lakh crore recorded as of March 31, 2023.

Analyst Reactions: Nomura maintained its “buy” rating for the stock with a price target of ₹190. The brokerage said that the private sector bank posted strong loan and deposit growth. The analysts also added that they expect net interest margins to be stable sequentially.

On the other hand, Citi maintained its “sell” rating for the stock with a target price of ₹135. Morgan Stanley also maintained an “equalweight” rating for the stock with a price target of ₹165.

Price Action: Federal Bank’s share price was up 1.04% to trade at ₹156.10 as the markets opened on Thursday.

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