The Federal Bank Ltd. Stock Analysis

Federal Bank, earlier known as Travancore Federal Bank, was incorporated in 1931. Though initially it was known as the Travancore Federal Bank, it gradually transformed into a full-fledged bank under the able leadership of its Founder, K P Hormis. The name Federal Bank Limited was officially announced in the year 1947 with its headquarters nestled on the banks on the river Periyar. Since then there has been no looking back and the bank has become one of the strongest and most stable banks in the country. It began operations with an authorized capital of Rs 5,000. In the beginning it was engaged in auction chitty and other banking transactions related to agriculture and industry. Today it is the largest traditional private sector banks in the country.

The bank is the fourth largest bank in India in terms of capital base and can easily boast of a Capital Adequacy Ratio of 17.23%, one of the highest in the industry. This along with the existence in a highly regulated environment has helped the bank to tide over the recession with minimum impact to its financial stability.

The bank has been expanding organically over the past few months. The bank believes in extending their reach to their customers by making its services available to all, 24x7. The bank has branches and ATMs across India in addition to the Representative Office at Abu Dhabi that serves as a nerve centre for the NRI customers in UAE.

Products & Services

Personal Banking - The bank provides a wide range of banking products and services such as saving accounts, deposits, personal loans, ATM services, telebanking services, RTGS, insurance, etc.

NRI Banking - The bank offers a wide range of NRI services through all its branches. Non-Resident Indians (NRI) can open Non-Resident External (NRE), Non- Resident Ordinary (NRO) accounts in Indian Rupee. You can also have Foreign Currency Non- Resident (FCNR) accounts in six foreign currencies approved by Reserve Bank of India (US Dollar, British Pound, Euro, Japanese Yen, Canadian Dollar and Australian Dollar). Returning NRIs can open Resident Foreign Currency (RFC) account with any of their branches.

SME-Business Banking - The bank offers a parameterized loan and various current account products tailor-made for each sector under SME. Competitive pricing, relaxation in collateral security, collateral free loans with CGTMSE cover, customization in various current account products, cash management services, internet bill payment facility etc are some of the features of their products which makes them a real friend of entrepreneurs.

Corporate Banking - The bank offers customized structured products to meet the specialized requirements of corporates, institutions and business clients. Each member of their Corporate Finance team brings with him a wealth of transaction experience across transaction varieties and sectors to cater to you better.  The bank has emerged as one of the leading private sector banks in the country, in providing a gamut of products for industry, trade and infrastructure sectors.  The bank serves a wide range of customers across varying industries, segments and regions.

Awards

2012-13

Federal Bank won the Banking Frontier's Finnoviti 2013 Award for its innovation Virtual Accounting System (VAS)
Federal Bank won IBA Innovation Award 2013 for FedBook
Federal Bank was awarded ""The Best Bank among Private Sector Banks""
Federal Bank was awarded the ""Most Socially Committed Organization""
Federal Bank won ACI Excellence Award 2013 for Apna Gold
Federal Bank was awarded ""The Best Bank among Private Sector Banks""
Federal Bank won two IDRBT Awards for Excellence in Banking Technology

2011-12

Federal Bank received the NPCI award being the highest contributor in number of transactions in the month of August 2012.
Federal Bank received the NPCI Award for Excellence in promotion of Inter Bank Payment Service.
Federal Bank received IDRBT Banking Technology Excellence Awards for year 2011-12
National award of excellence 'Quality Brands India 2012-14'
Rashtriya Udyog Ratna Award
Federal Bank bagged the prestigious Golden Peacock Award for its CSR Initiatives
Global CSR Award for ""Best Corporate Social Responsibility Practice Overall""
ACI Excellence Awards 2012
KMA Excellence Awards 2011

2010-11

Web Awards
The IDRBT award

2009-10

Excellence Award
The ‘Great Mind Challenge' award
Economic Times Intelligence Group Survey

2006-07

• YMCA awarded 'Suvarna Kerala Puraskaram' to Federal Bank for its notable contribution for the development of Kerala State
• Survey conducted by the Financial express in association with Ernst & Young, on the basis of five key parameters, viz., strength and soundness, growth, profitability, efficiency and credit quality, adjudged Federal Bank among top 3 banks in the old private Sector Banks category.
• Won the Banking technology award instituted by Indian Banks Association for the Best clearing & Settlement System
• Adjudged the Most efficient Bank in India in the large bank category by the annual survey conducted by Business today in association with KPMG Consulting

2007-08

• Survey conducted by The Financial Express in association with Ernst & Young, on the basis of five key parameters, viz. strength and soundness, growth, profitability, efficiency and credit quality, adjudged Federal Bank, for the second time, one among the top three Banks in the Old Private Sector Banks category.
• The Bank won the 'Best Core Banking Project Award 2007' at the Asian Banker IT Implementation Awards 2008.
• In the annual survey conducted by Business Today, in association with KPMG Consulting, Federal Bank was adjudged the “Most Efficient Bank” in the Large Bank Category, second year in a row

2008-09

• Federal Bank became the runner up for the 'Best Customer Relationship Achievement' Award in the Banking Technology awards instituted by IBA & TFCI for the outstanding achievements in technology infusion and dissemination.
• The Dun & Bradstreet Banking award 2009 for the “Top Private Sector Bank“under the category Priority Sector Lending including Financial Inclusion.
• Ranked the Number One Old Private Sector Bank, among 56 scheduled commercial banks, on four dimensions namely growth, size, sustainability and risk in the PWC Survey conducted by Business World.

2009-10

• The Economic Times Intelligence Group has conducted a comparison of Indian Banks (ET Investor’s Guide dated 23.11.2009) on various parameters. Federal Bank has been ranked Number One in Efficiency and in Financial Strength when compared to other Indian Banks.
• Federal Bank has won the ‘Great Mind Challenge’ award for implementing the most innovative solution for business. This award is being introduced by IBM for the first time in India for business development initiatives. Federal Bank is the first Bank in India to receive the award.
• The Excellence Award for “Second Best Bank” among Traditional Private Sector Banks in Kerala - constituted by the State Forum for Banker’s Clubs Kerala. The Bank also received all three Excellence Awards for Best Branches and the award for the Best Branch Managers among Traditional Private Sector Banks in Kerala.

2010-11

• The Banking Technology Excellence Award for the year 2010-11 in the category “IT for Internal Effectiveness” among small banks was conferred on Federal Bank by the IDRBT, at a function held in Hyderabad.
• The WebAwards is the premier annual website award competition that names the best Web sites in 96 industries while setting the standard of excellence for all website development. Federal Bank has won WebAwards for the 'Bank Standard of Excellence (2010)' declared by the Web Marketing Association on Sept 15, 2010 for its content rich, innovative and eases of use corporate website.

Milestones

1931 - The Federal Bank Limited (the erstwhile Travancore Federal Bank Limited) was incorporated with an authorized capital of rupees five thousand at Nedumpuram, a place near Tiruvalla in Central Travancore on 28.4.1931 under the Travancore Company's Act. It started business of auction -chitty and other banking transactions connected with agriculture and industry. The bank though successful in the earlier periods, suffered setbacks and was on the verge of liquidation.

1944 - K P Hormis, and his close relatives /friends obtained controlling interest in the Bank.

1945 - The paid up capital was increased to Rs 71 000.The Board of Directors of the Bank was reconstituted in 1945 and fresh Articles of Association adopted. On 18.5.1945, the Regd. Office of the Bank was shifted to Aluva and the Bank commenced business by opening its first branch at Aluva.

1946 - The Bank opened its second branch at Angamally on 26.1.1946

1947 - In the Board Meeting held on 24.3.1947, it was resolved to change the name of the Bank as 'The Federal Bank Limited'. The third branch of the Bank was opened at Perumbavoor on 18.4.1947

1959 - The Bank was licensed under Sec.22 of the Banking Companies Act, 1949 on 11.7.1959. Bank floated several kuries one after another. It also introduced several new deposit schemes. These strategies helped the Bank to grow at a greater pace

1964

The Bank embarked for a massive takeover bids, which accelerated its growth horizontally and vertically. In that process it took over the assets and liabilities of the following banks:

• The Chalakudy Public Bank Ltd., Chalakudy
• The Cochin Union Bank Ltd., Trichur
• The Alleppey Bank Ltd., Alleppey

1965 - The St. George Union Bank Ltd. Puthenpally was merged with the Bank

1968 - The Marthandom Commercial Bank Ltd. Trivandrum was amalgamated with the Bank

1970 - The Bank became a Scheduled Commercial Bank in 1970, which also coincided with the Silver Jubilee Year, since the Bank commenced its operation in Aluva

1972 - Witnessed expansion beyond the home state. The Bank became an Authorized Dealer in Foreign Exchange in 1972.International Banking Department started functioning from Mumbai in 1973.Since then, the Bank could substantially increase its market share of the NRI business. The International Banking Department was later shifted to Cochin in 1982 as part of consolidation and centralization of activities

1973 to 1977 - During the period, the bank adopted a massive branch expansion and growth oriented programmes. To reflect the bank's approach towards the Industrial finance it adopted a new emblem -Farmer in action encircled by an industrial wheel. A few hallmarks of the period: In the year 1973, there was a quantum jump in deposits to the tune of 67% and in advances to the tune of 56% over that of the previous year. The deposits grew by 52% while the advances registered an increase of 45%. Increase in Priority sector advances was by 63%.

1975 - Bank opened 53 branches and in 1976 it opened 42 branches. The total number of branches reached 276 from a position of 114 in 1973

1977 - The paid up capital was increased to Rs 100 lakhs from a position of Rs 10.66 lakhs.

1980 - V Verghese took over the resigns of the bank as Chairman and Chief Executive Officer on 2.7.1980. Having worked long years in State Bank of Travancore with well established traditions, systems and methods, he placed his faith in introducing time tested and well proven methods of organisation into the Bank

1983

• V.K.Syamasundaran after long innings in Reserve Bank of India took over as Chairman and Chief Executive Officer of the Bank as a successor to Mr.V.Verghese on 16.7.83.
• The foundation stone of the multi-storied Administrative Building was laid by the Founder K.P.Hormis on 26.12.83

1984 - As part of the organization redesigning recommended by National Institute of Bank Management in November, 1984, bank has introduced Three Tier Organizational Setup with Head Office, Regional Offices and Branches. Agricultural Finance Department was set up in Head Office with technically qualified personnel at central office and field level. Bank's performance in the field of agricultural and priority sector lending improved substantially thereafter.

1985 - In tune with the NIBM recommendation, Personnel and Industrial Relations Department was set up in July, 1985. With the active assistance of Tata Consultancy Service, bank also set up its computer department. A WIPRO computer was installed at our Head Office on July, 1985 paving the way for computerization of the Bank. Later, a PSI microcomputer was installed at our International Banking Department at Cochin. The first Advanced Ledger Posting Machine (ALPM-a Wipro banker) was installed at Br. Aluva-Bank Junction branch

1987 - The long cherished dream of the Federal Family, the multi-storied administrative building complex was inaugurated by A Ghosh, Dy. Governor, Reserve Bank of India

1988 - M.P.K.Nair, a seasoned commercial banker trained in the Union Bank of India assumed the captaincy of the Bank on 1-7-1988 as its Chairman and Chief Executive Officer

1989 - Commenced Merchant Banking Operations

1992 - Deposits crossed Rs.10,000 Million. Adopted profit sector banking as its slogan

1993 - Roped in ICICI group as a shareholder through private placement

1994 - Tapped the Capital Market with a public issue in March, 1994. The issue oversubscribed by about 60 times. Started Leasing Business

1995 - Registered 142.44% increase in PAT in FY 94-95.Bank registered a CAGR of 78.13% in PAT during the period 1991-96. Emerged as a perfect banking partner with diverse products, global reach and focus on automation and HRM. Deposits cross Rs 35,000 Million

1996 - K Nandan, a veteran banker from State Bank of India took the stewardship on 1-1-1996: The bank had steady growth. The bank's business crossed Rs.100000 Million mark as on 31/3/98 for the fi st time

1997 - Bank's first ATM was inaugurated at Ernakulam North on 27.02.97

1999

• On 1.01.99, K.P.Padmakumar, the Executive Director of the Bank took over the baton from Shri. K Nandan. He thus became the first Chairman and Chief Executive Officer of the bank risen from the rank and file
• Bank's 400th branc was inaugurated at Calcutta- Shakespeare Sarani on 19.2.1999. The total business of the bank exceeded Rs.110000 Million as on 31.03.99

2000

• On 24.1.2000 Bank started Any Where Banking at Bangalore connecting all branches located in the Bangalore metro
• Launched Depository Services in association with NSDL on 24.2.2000
• The Bank has commenced Internet Banking 'FedNet' on 28th April 2000 with software support from Infosys Technologies Ltd
• Federal Millennium CD is released on 18.9.2000

2001 - In March 2001, Wide Area Network was launched connecting Regional Offices at Mumbai, Bangalore, Chennai, Ernakulam and Chennai F & I with Head Office

2002

• All the 412 branches of the Bank were fully computerised (using FedSoft) as on 31.03.2002
• The Installation of switch for networking all the ATMs, already installed/proposed to be installed, started from 17.08.2002
• Dec 10, 2002 Federal Bank introduces FedAlerts, and FedMobile, another first of its kind service among traditional banks in India. Real time transaction alerts across the globe, and customisable options make the service unique

2003 - International Debit Cards launched

January 2004 - Federal Bank becomes the first traditional bank to network all its branches and attain 100% connectivity

February 2004 - Co-branded credit cards launched in association with ICICI Bank

October 2004 - RTGS is enabled in all branches of the Bank and becomes the first bank in India to implement RTGS facility in all the branches. Online Railway Reservation through FedNet launched. The First Kiosk inaugurated at the Marine Drive (Kochi) branch

December 2004

• First bank to launch automated telephone bill payment through Interactive Voice Response System (IVR). Bank launched an innovative product 'Fed-e-Pay' for automated payment of utility Bills
• The Bank issued Bonus shares in the ratio of 2:1

February 2005 - Federal Bank is awarded for Best Use of Information Technology in Retail Banking by IBA and Infosys. The runner up status reveals the strength and innovation in technology initiatives

May 2005 - M Venugopalan joined the Bank as Chairman and Chief Executive Officer Prior to joining the Bank, he was the Chairman and Managing Director of Bank of India, one of the leading public sector banks in India, from August 2003 to April 2005, and was an executive director of the Union Bank of India immediately prior to joining the Bank of India

June 2005 - Federal Bank in association with AMRITA super specialty hospital launches Fed+Amrita, an innovative online system for fixing medical consultation, Health check up, and inpatient payments from anywhere

January 2006 - Federal Bank becomes the first traditional bank to successfully issue GDR. While the issue of 18 million Global Depository Receipts realized $71.46 million, the green shoe option of 2 million GDR was also fully subscribed, bringing in a total of $80 million to the bank. The GDR, each representing an underlying equity share, were priced at $3.97 each - working out to approximately Rs.175 per share. The issue was subscribed by major banks and Financial Institutions across the globe.

February 2006 - Federal Bank wins two prestigious awards for BEST USE OF IT IN RETAIL BANKING & BEST PAYMENTS INITATIVE from IBA and TFCI. This is the second consecutive time that the Bank has won the award for best use of IT in Retail Banking. More details available here

September 2006

• Amalgamation of Ganesh Bank of Kurundwad with Federal Bank
• Bank’s Total No. of Branches crossed 500

November 2006 - Bank entered into Life Insurance Joint Venture with IDBI & FORTIS

January 2007 - Bank won the award under category “Best Clearing & Settlement System” in the Banking Technology Awards 2006 instituted by IBA, Infosys & TFCI

Mar 2007 - A fully fledged Data Center was set up by the Bank

June 2007 - Bank formed a Centralized Processing Centre for centralizing the account opening process to make it quick and efficient.

September 2007 - All branches/offices of the Bank were migrated to Centralised Banking Solution (CBS), Finacle

January 2008

• Successfully completed 1:1 Rights Issue
• Opened first overseas Representative Office at Abu Dhabi, UAE

March 2008

• Bank’s Total No. of Branches crossed 600
• The Asian Banker, together with the Technology Advisory Council of The Asian Banker Summit, has affirmed Federal Bank as sole recipient of the Best Core Banking Project Award 2007

September 2008 - Bank started providing Online Stock Trading facility to the customers in association with M/s Geojit Financial Services

January 2009 - Bank won the award under category 'Best Customer Relationship Achievement' in the Banking Technology awards 2008 instituted by IBA, Infosys & TFCI for the outstanding achievements in technology infusion and dissemination. The Bank was winning IBA-TFCI awards for the fourth time

March 2009

• Total Business of the Bank crossed Rs 50,000/- crores
• Bank becomes BASEL-II compliant

August 2009

• Bank has taken an important step in customer Service by dedicating 24 X 7 Contact Center to the customers. Started offering NEFT/RTGS facility through Internet Banking. Bank started offering Telebanking facility through a Toll-free number
• Launched three new variants of Visa Debit Cards – Platinum, Gold and Shop’n Save

January 2010 - Launched Point Of Sale (POS) Terminal Business

June 2010 - Federal Bank became part of National Financial Switch ATM Network - the largest ATM network in India

July 2010

• Total number of branches crossed 700
• Launched Debit Cards in association with MasterCard
• Received the Financial Express-India’s Best Banks Award 2009-10

August 2010 - From 24.08.2010, the joint venture IDBI FORTIS renamed as IDBI FEDERAL

September 2010

• Shyam Srinivasan has taken charge as 8th MD &CEO of Federal Bank
• Federal Bank had the rare privilege to become the official partner to the one day international cricket match between India & Australia

December 2010 - Suma Varma, Regional Director, RBI, Kerala and Lakshwadeep inaugurated the Bank’s financial inclusion product FEDJYOTHI and released FEDJYOTHI smart cards at Alapuzha on December 18, 2010

February 2011 - Federal Reach, the in house publication from the Bank received the Kerala Management Association Excellence Award for the Best Corporate Magazine published /received during the calendar year 2010

March 2011 - The first Gram Jeevan Branch at Thuruthy Vengoor West was inaugurated by Shri. P. C. Cyriac, Chairman, Board of Directors

April 2011 - P. C. Cyriac appointed as part time chairman of the Board of Federal Bank

May 2011

• Bank felt its presence in the state of Jammu by opening its 1st branch in the state
• Abraham Chacko joined the Bank as Executive Director

June 2011 - The Bank launched an instant online remittance solution to the visa debit card holders across the country, in association with Visa, the first Bank in India to do so.

September 2011 - Federal Bank was one of the first banks in Kerala to implement Information Communication Technology (ICT)/Business Correspondents model in 12 villages allotted to the bank one year before the schedule.

October 2011 - Federal Bank has signed a memorandum of understanding with National Small Industries Corporation (NSIC) with the objective of facilitating smooth credit flow to the MSME (micro, small and medium enterprises) sector. The tie-up would provide a broader platform for extension of easy credit to Federal Bank's MSME customers.