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Report on merger talks with Kotak Mahindra Bank speculative: Federal Bank

Shares of Federal Bank jumped nearly 7% to hit a 52-week high level of Rs 129.70 per share on the BSE in Monday’s early deals following a news report saying that the top management of the two banks had met to discuss the merger.

Report on merger talks with Kotak Mahindra Bank speculative: Federal Bank
New products such as microloans and personal loans put together contributed around 3% to total loans and management expects incremental growth to be primarily driven by them, ICICI Securities said in a report.

Shares of Federal Bank remained upbeat on Monday as the private sector lender denied rumours of its merger with Kotak Mahindra Bank. The Kerala-based lender, in an exchange filing, has termed the report as ‘speculative’. At closing, shares of Federal Bank were up 3.43% at Rs 123.55 on BSE.

“We wish to clarify categorically that the news report of a merger between Federal Bank and another private bank is speculative in nature,” Federal bank said.

Shares of Federal Bank jumped nearly 7% to hit a 52-week high level of Rs 129.70 per share on the BSE in Monday’s early deals following a news report saying that the top management of the two banks had met to discuss the merger. The bank stock has been on an upward trend over the last few days as it is up about 12% in the last five trading sessions following the improved asset quality and expectation of higher loan growth in Q1FY23.

The bank’s gross advances stood at Rs 1.54 trillion on June 30, 2022, higher by 16% year-on-year led by retail and MSME loans. The bank’s management has provided guidance of 18% for credit growth in FY23 aided by growth across all segments. The bank is planning to increase the share of higher-yielding assets through business banking, commercial banking, commercial vehicles and credit cards.

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New products such as microloans and personal loans put together contributed around 3% to total loans and management expects incremental growth to be primarily driven by them, ICICI Securities said in a report.

While the bank’s asset quality improved in Q1FY23, slippages were consistent with its expectations. The bank has guided 12-15% of the restructured loans to slip into non-performing assets (NPA) in FY23.

Federal Bank has 1,291 branches and representative offices in Abu Dhabi and Dubai and an IFSC Banking Unit (IBU) in Gujarat International Finance Tec-City (GIFT City).

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