Federal Bank was incorporated as Travancore Federal Bank Limited to cater to the banking needs of Travancore Province in the year 1931. Bank was reconstituted and fresh Articles of Association were adopted and the Bank was renamed as The Federal Bank limited later in 1949. Bank started Information Technology Strategic Plan 2000 for automating its branches in a phased manner. Bank has also developed "Fedsoft" the automation software package in house. Software was developed in collaboration with Datanet Corporation, Bangalore and the package was based on state of the art technology and the latest workflow concepts. Bank started Internet banking and E-commerce in the month April 2000. Bank was one of the few private sector banks in the country to start this facility.

Bank has marketing agreement with some commercial agencies for its E-commerce business. Bank also launched mobile banking services via SMS technology. Later "Anywhere banking" facility" was launched to provide the convenience of doing transactions from interconnected branches. Today Bank has 100% interconnectivity among all its branches. It also acquired a prime property in Chennai owned by Ramco Super Leathers; spread over six grounds and 26,000 sq ft. Bank joined hands with ICICI Prudential Life Insurance Co. Ltd. for premium collection through its branches.

Products & services:

Bank is one of the largest private sector banks in the country and biggest one in the south India. Bank has special services for a large number of NRIs. It works into corporate finance, merchant banking and export finance. But the main part is the retail business that is growing rapidly. Bank has a strategic alliance with ICICI.

Federal Bank has played a pioneer role in developing and deploying new technology assisted customer friendly products and services. Bank provides hi-tech facilities like an e-shopping, Mobile Alerts, Mobile Banking service, Express Remittance Facility from Abroad, Funds transfer, visa transfer, quick loans approvals and fast deposits. Bank has the full range of delivery channels including, Internet Banking, Mobile Banking and Alerts, Any Where Banking, Interconnected Visa enabled ATM network, E-mail Alerts, Telephone Banking and a Centralized customer Call Centre with toll free number. Federal Bank already has the largest number of ATMs in Kerala, taking round-the-clock banking convenience to even many rural areas.

Apart from above services bank has full range financials services like - Depository Services, Credit Cards, Life Insurance Products in association with ICICI Prudential, General Insurance Products in association with United India Insurance, Export Credit Insurance Products in association with ECGC, Express Remittance Facility from Abroad - FEDFAST, Cash -On- Line Express Cash Remittance, Lock Box Service for NRI's in the US, Cash Management Services, Merchant Banking Services, E-shopping Payment gateway, BSNL Bill Payment, Online LIC Insurance Payment, Easy Pay- On-line fee payment system, Online Railway Reservation System, Online Kiosks for customers. Short-term deposit has been rated by CRISIL and awarded a high score of P1+.

Federal Bank is on of the favorite bank for NRI's. Almost 30% of bank deposits come from the NRI's only. Bank provides special services to its NRI customers. NRE/FCNR/NRO Accounts can be opened and maintained with all branches in India. Bank having a worldwide network of correspondents and it maintains foreign currency accounts in 14 currencies. NRI's can use services of these banks for remittances to an account maintained with any of the branches. Many banks and exchange houses having branches in major centers in Middle East are maintaining rupee-drawing arrangement with the bank.

Many branches are authorized to pay at par against drafts received under this arrangements enabling faster remittance to India. Bank provides loans to almost all segments - personal loans, car loans, housing loans, agri mobile loan, demat loan, consumer loan, federal vidya loan, Kissan credit cards, Loan against rent receivable, instant relief loan, gold loans, warehouse loan, mortgage loans, Vanijya loan, IPO/ public offer Financing, Jeevan Suraksha loan, Loan for medical Practitioners, Sulabh Yatra laon, Federal Bonyoyage loan, Federal easy cash, Federal special vidya loan, Home overdraft scheme, Gold equity scheme, House plot purchase. Bank also provides different kind of deposits schemes for different needs of the customer.

Valuation:

At current market price, stock is trading at 8.74 P/E multiple of its FY2010 estimated earnings and 0.85 multiple of its FY2010 Book Value par share. We recommend investors to buy "Federal Bank Limited" for medium to long-term investment prospective.