A host of midcap private lenders including Federal Bank, RBL Bank, Bandhan Bank and AU Small Finance Bank have provided their provisional updates for the September 2024 quarter (Q2FY25). A number of brokerage firms including both domestic and global have shared their views on these lenders after their quarterly updates. Here's what brokerage have said on these lenders:
Federal Bank Federal Bank reported total deposits of Rs 2.69 lakh crore, reflecting a 16 per cent year-on-year (YoY). The bank’s customer deposits, excluding interbank and certificates of deposit, also saw a 16 per cent YoY increase to Rs 2.53 lakh crore. The bank’s CASA deposits also grew by 11.5 per cent YoY, reaching Rs 80,923 crore.
Nomura said that Federal Bank's September 2024 quarter updates showed a strong loan growth but deposits growth on a quarter-on-quarter comparison remained soft. CASA growth remained steady sequentially, it said with a 'buy' rating and a target price of Rs 240.
Nuvama Institutional Equities said that Federal Bank came out with a strong business update with 5 per cent QoQ loan growth led by 7 per cent growth in retail lending and 5 per cent deposit growth. "We forecast NIM to expand 7 bps QoQ after 2 quarters of steep decline. We believe core PPOP growth will be strong at 9 per cent, it added with a 'buy' rating a target price of Rs 160.
AU Small Finance Bank AU Small Finance Bank's total deposits rose 12.7 per cent QoQ to Rs 1.09 lakh crore. The year-on-year values could not be used to evaluate the bank's performance due to its merger with Fincare Small Finance Bank which came into effect on August 1, 2024. The total deposits Rs 97,000 crore. The CASA deposits rose 10.9 per cent sequentially to Rs 35,000 crore.
Global Brokerage firm Nomura said that the September 2024 quarter update remains positive after strong loan and deposit growth. The lender has maintained a solid CASA deposits growth of 10.9 per cent QoQ. However, It has maintained a 'neutral' rating on AU Small Finance Bank with a target price of Rs 650.
Motilal Oswal expects AU Bank's margins to see slight moderation and business growth to remain healthy post-merger. CoF and C/I ratios are expected to remain elevated. Asset quality ratios to remain broadly stable, it added with a 'buy' rating and a target price of Rs 830 on the stock.
Bandhan Bank Bandhan Bank reported a growth of 24.6 per cent in its total business for the second quarter of FY25. The private lender's total business reached Rs 2,73,163 crore, while loans and advances stood at Rs 1,30,652 crore, while total deposits climbed to Rs 1,42,511 crore. The collection efficiency ratio across all business verticals at Bandhan Bank was recorded at 98.2 per cent.
Jefferies said that Bandhan Bank has reported a steady business growth in Q1 but collection efficiency has taken a hit on EEB loans. Its deposits rose 27 per cent YoY, led by a 58 per cent rise in bulk deposits. It has maintained a 'buy' rating on Bandhan Bank with a target price of Rs 240.
Bandhan gave a strong update with loans growing 4 per cent QoQ and deposits 3 per cent.. CE for non EEB improved while CE for EEB remained unchanged at 98 per cent, said Nuvama Institutional Equities. NIM may decline 12bps QoQ, while Opex rose with higher spends in the quarter despite weak loan growth, it added with a 'hold' rating a target price of Rs 242.
RBL Bank RBL Bank reported a robust growth in both deposits and advances. The private lender reported total deposits of Rs 1,08,028 crore, an rise of 20 per cent YoY. Gross advances rose 15 per cent YoY to Rs 89,786 crore. CASA reached Rs 36,221 crore, up 13 per cent from the previous year.
Commenting on RBL Bank, Morgan Stanley said that loan growth has moderated while retail loans grew 2 per cent on a sequential basis against 10 per cent in the previous quarter. Non-retail loans also grew at 2 per cent QoQ, while we're to the tune of minus 6 per cent in the preceding quarter.
"Deposits grew 7 per cent QoQ, after a decline of 2 per cent in the June 2024 quarter. Average LCR ratio remained strong at 142 per cent in Q2FY25 compared to 137 per cent in Q1FY25," said Morgan Stanley with a target price of Rs 210 and an 'underweight' rating on the stock.
Motilal Oswal expects RBL Ban's earnings to moderate led by higher provisions and asset quality ratios to deteriorate. It also sees cost ratios likely to remain elevated. "Margin and credit cost outlook to be the key monitorables," it said with a 'neutral' rating with a target price of Rs 250 on the stock.