( in ₹ Millions)
FY 2009/10 2010/11 2011/12
INCOME :
Interest Earned 36,732 40,520 55,584
Interest/discount on advances/bills 28,497 31,688 41,898
Interest on balances with RBI and other interbank funds 299 106 349
Income on investments 7,834 8,680 13,157
Others 102 46 180
Other Income 5,309 5,168 5,323
Commission, exchange, and brokerage 1,053 2,502 2,516
Profit/(loss) on sale of investments (net) 1,077 458 821
Profit on sale of fixed assets 4 3 3
Foreign exchange gains 446 572 842
Dividend received 47 35 51
Provisions written back 1,277 1,461 857
Service fee 877 0 0
Miscellaneous income 528 137 233
TOTAL INCOME 42,041 45,688 60,907
EXPENDITURE
Interest Expended 22,624 23,054 36,050
Interest on deposits 21,683 21,620 33,313
Interest on RBI/interbank borrowings 1 99 485
Other interest 941 1,336 2,252
Net Interest Income 19,417 22,634 24,858
Operating Expenses & Administrative Expenses 6,769 8,361 9,793
Payments to and provisions for employees 3,661 4,804 5,439
Rent, taxes, and lighting 711 796 948
Printing and stationery 89 102 104
Advertisement and sales promotion 105 181 161
Depreciation on bank's property 502 543 567
Director's fees, allowances, and expenses 10 7 7
Auditor's fees and expenses 69 28 45
Law charges 48 54 50
Communication expenses 150 189 276
Repairs and maintenance 193 230 373
Insurance 320 358 435
Other expenses 911 1,069 1,389
Provisions and Contingencies 4,053 5,254 3,370
Provision for investments -977 111 349
Others provisions 5,030 5,143 3,021
Profit Before Tax 8,595 9,018 11,695
Taxes 3,950 3,147 3,927
Profit After Tax 4,645 5,871 7,768
Number of outstanding shares* 855 855 855
Adjusted EPS 5.43 6.86 9.08
Dividend per share 1.00 1.70 1.80
*After adjusting for share split from INR 10 each to INR 2 each done by the company with effect from Oct 2013.
2012/13 2013/14
61,676 69,461
46,357 50,111
564 524
14,646 17,768
109 1,058
6,644 6,938
3,047 3,338
2,058 1,562
2 13
794 1,251
59 147
481 415
0 0
204 212
68,320 76,399
41,929 47,175
38,375 42,095
779 1,121
2,774 3,959
26,391 29,225
11,845 14,421
6,315 7,715
1,327 1,612
126 154
127 206
787 937
8 11
53 58
58 43
323 435
439 413
473 579
1,810 2,255
2,608 2,684
-368 1,116
2,976 1,568
11,938 12,120
3,556 3,731
8,382 8,389
855 855
9.80 9.81
1.80 2.00
FY 2009/10 2010/11 2011/12 2012/13
SOURCES OF FUNDS :
Share capital 1,710 1,710 1,710 1,711
Total reserves 45,194 49,376 55,353 61,936
Deposits 360,580 430,148 489,371 576,149
Demand deposits 18,313 24,058 25,459 29,089
Savings deposit 76,111 91,483 109,299 127,432
Term deposits/fixed deposits 266,156 314,607 354,613 419,627
Borrowings 15,468 18,884 42,410 51,870
Borrowings From Reserve Bank of India 0 1,000 900 3,300
Borrowings From other banks 5,000 0 582 322
Borrowings From other financial institutions 6,881 14,173 27,640 34,339
Borrowings in the form of bonds/debentures 3,200 3,060 0 0
Borrowings From out of India 387 651 13,289 13,909
Other Liabilities & Provisions 13,804 14,446 17,423 18,664
Bills payable 362 243 205 302
Interoffice adjustment liabilities 1,926 1,824 1,637 1,857
Interest accrued 1,452 1,492 2,659 688
Deferred tax liabilities 840 0 642 0
Provision for standard assets 1,452 1,596 1,960 2,454
Proposed dividend 855 1,454 1,539 1,540
Corporate dividend tax payable 142 236 250 262
Other liabilities and provisions 6,775 7,601 8,531 11,563
Total Liabilities 436,756 514,564 606,268 710,329
APPLICATION OF FUNDS :
Cash and Balance with Reserve Bank of India 23,189 29,351 24,241 27,425
Cash with RBI 20,420 26,024 20,283 22,136
Cash in hand and others 2,769 3,327 3,958 5,289
Balances with banks and money at call 4,045 8,133 11,084 9,775
Bank balance and call money in India 3,820 7,136 9,678 6,890
Bank balance and call money outside India 226 997 1,406 2,885
Investments in India 130,546 145,377 174,025 211,546
Government of India/state government securities 92,775 99,645 115,312 145,751
Approved securities - others 8 4 0 0
Equity shares - corporate 1,796 1,681 1,907 2,564
Debentures and bonds 6,498 6,053 9,604 8,017
Preference shares - corporate 0 0 0 0
Subsidiaries and/or joint ventures/associates 1,270 2,170 3,959 3,980
Others (Mutual Fund units, Priority sector deposits,
Pass Through Certificates, Certificates of
deposit/Commercial paper) 28,199 35,824 43,242 51,234
Other investments 0 0 0 0
Investments outside India 0.0 0.0 0.0 0.0
Advances 269,501 319,532 377,560 440,967
Bills purchased and discounted 12,167 8,986 18,538 14,939
Cash credit, overdraft and loans repayable 139,032 174,115 216,832 265,154
Term Loans 118,302 136,431 142,189 160,874
Capital Work in progress 0 0 0 24
Net block 2,898 2,898 3,261 3,975
Other assets 6,577 9,273 16,096 16,618
Total Assets 436,756 514,564 606,268 710,329
2013/14
1,711
67,795
597,313
33,796
152,843
410,674
56,880
4,450
322
39,033
1,978
11,096
22,243
228
1,928
1,726
2,857
2,456
1,711
279
11,058
745,941
31,043
25,001
6,042
14,251
5,733
8,518
241,179
158,231
0
1,758
11,361
0
3,980
65,850
0
0.0
434,361
13,029
229,775
191,558
226
4,023
20,859
745,941
( in INR Millions)
FY 2013/14 Forecasted Variable
INCOME :
Interest Earned 69,461
Interest/discount on advances/bills 50,111 12%
Interest on balances with RBI and other interbank funds 524 2%
Income on investments 17,768 7%
Others 1,058
Other Income 6,938
Commission, exchange, and brokerage 3,338 0.8%
Profit/(loss) on sale of investments (net) 1,562
Profit on sale of fixed assets 13
Foreign exchange gains 1,251
Dividend received 147
Provisions written back 415
Miscellaneous income 212
Total Income 76,399
EXPENDITURE
Interest Expended 47,175
Interest on deposits 42,095 7%
Interest on RBI/interbank borrowings 1,121 2%
Other interest 3,959
Net Interest Income 29,225
Operating Expenses and Administrative Expenses 14,421 19%
Provisions and Contingencies 2,684
Provision for investments 1,116
Others provisions 1,568
Profit Before Tax 12,120
Taxes 3,731
Face Value 2
Profit After Tax 8,389
Number of shares outstanding 855
Adjusted earnings per share 9.81
Dividend payout ratio 20%
Total Dividend 1710.619
( in ₹ Millions)
FY 2013/14
SOURCES OF FUNDS :
Share capital 1,711
Total reserves 67,795
Deposits 597,313 138%
Demand deposits 33,796 6%
Savings deposit 152,843 26%
Term deposits/fixed deposits 410,674 69%
Borrowings 56,880 10%
Other Liabilities and Provisions 22,243
Total Liabilities 745,941
APPLICATION OF FUNDS :
Cash and balance with RBI 31,043
Cash with RBI 25,001
Cash in hand and others 6,042
Balances with Banks and Money at Call 14,251
Bank balance and call money in India 5,733
Bank balance and call money outside India 8,518
Investments in India 241,179 40.4%
Advances 434,361
Bills purchased and discounted 13,029
Cash credit, overdraft, and loans repayable 229,775
Term loans 191,558
Capital work in progress 226
Net block 4,023 1%
Other assets 20,859
Total Assets 745,941
Assumptions 2014/15 2015/16 2016/17 2017/18
79,643 91,352 104,817 120,303
Yield assumed similar to FY 2013/14 57,627 66,272 76,212 87,644
Yield assumed similar to FY 2013/14 524 524 524 524
Yield assumed similar to FY 2013/14 20,434 23,499 27,023 31,077
Same as FY2013/14 1058 1058 1058 1058
6,665 7,241 7,903 8,665
In line with loan growth 3,839 4,415 5,077 5,839
1,562 1,562 1,562 1,562
Similar to FY 2013/14 13 13 13 13
Similar to FY 2013/14 1,251 1,251 1,251 1,251
Similar to FY 2013/14 147 147 147 147
Similar to FY 2013/14 415 415 415 415
Similar to FY 2013/14 212 212 212 212
86,308 98,593 112,721 128,968
53,597 60,977 69,458 79,204
As % of deposits in line with FY 2013/14 48,409 55,670 64,021 73,624
As % of borrowings in line with FY 2013/14 1,230 1,348 1,479 1,622
Similar to FY 2013/14 3,959 3,959 3,959 3,959
32,711 37,616 43,263 49,764
Assuming constant cost/income ratio 16,291 18,610 21,277 24,343
Similar to FY 2013/14 1,116 1,116 1,116 1,116
Assumed to increase in line with loan growth 1,803 2,074 2,385 2,743
16,420 19,006 21,986 25,421
Tax rate assumed 30% 4,926 5,702 6,596 7,626
11,494 13,304 15,390 17,794
855 855 855 855
13 16 18 21
Assuming dividend payout ratio of 30% 30% 30% 30% 30%
3,448 3,991 4,617 5,338
Assumptions 2014/15 2015/16 2016/17 2017/18
Similar to FY 2013/14 1,711 1,711 1,711 1,711
75,841 85,154 95,927 108,383
Assuming previous year Advances to Deposit ratio 686,910 789,946 908,438 1,044,704
As % of deposits in line with FY 2013/14 38,865 44,695 51,399 59,109
As % of deposits in line with FY 2013/14 175,769 202,134 232,454 267,323
As % of deposits in line with FY 2013/14 472,276 543,117 624,584 718,272
Assumed to grow in line with FY 2013/14 62,373 68,397 75,003 82,247
Balancing figure 20,487 18,694 16,884 15,081
847,322 963,902 1,097,963 1,252,125
Similar to FY 2013/14 31,043 31,043 31,043 31,043
Similar to FY 2013/14 14,251 14,251 14,251 14,251
Assuming constant investment to deposit ratio, as in FY 2013/14 277,355 318,959 366,802 421,823
Assumed 15% increase in loans 499,515 574,442 660,609 759,700
14,983 17,230 19,815 22,787
264,241 303,877 349,459 401,878
220,291 253,335 291,335 335,035
Similar to FY 2013/14 226 226 226 226
Assuming increase in line with FY 2013/14 4,073 4,122 4,173 4,224
Similar to FY 2013/14 20,859 20,859 20,859 20,859
847,322 963,902 1,097,963 1,252,125
2018/19
138,111
100,791
524
35,738
1058
9,541
6,715
1,562
13
1,251
147
415
212
147,652
90,404
84,667
1,778
3,959
57,248
27,870
1,116
3,154
29,378
8,813
20,564
855
24
30%
6,169
2018/19
1,711
122,778
1,201,409
67,975
307,421
826,013
90,191
13,317
1,429,405
31,043
14,251
485,096
873,655
26,205
462,159
385,291
226
4,275
20,859
1,429,405
Federal Bank
Cost of equity
Terminal long-term growth rate
Present value of dividends for explicit forecast period, 2015–2019 ( ₹ millions)
Terminal value, beyond 2019 (₹ millions)
Present value of terminal value ( ₹ millions)
Intrinsic value of Federal Bank (₹ millions) = Present value of explicit forecast period + present value of terminal period
Number of equity shares
Per share value (₹)
Current price (₹)
Upside/(Downside)
14.34%
5.00%
15,437
69,355
35,489
50,926
855
60
46
29%
