Shares of private sector lender Federal Bank rallied nearly 9% to hit a 52-week high in intraday trade on Monday, driven by strong volume amid a merger report. The banking heavyweight witnessed a surge in buying activities after a report suggested that the lender is in merger talks with Kotak Mahindra Bank.

The bank, however, in an exchange filing clarified that the news report of a merger between Federal Bank and another private bank is “speculative in nature”. The clarification came in response to a media report which claimed that Federal Bank was in preliminary talks with Kotak Bank for a potential merger deal.

“In this regard, we would like to state that there is no information available with the Company as of today, which is required to be reported under extant SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and which may have a bearing on the stock price of the Company,” the bank said in a BSE filing today.

“We wish to assure you that the Company is committed to complying with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), and any information likely to have a bearing on Company shares will be disclosed to the Stock Exchanges in compliance with the Listing Regulations,” it added.

Riding high on merger buzz, Federal Bank share price gained 8.58% to hit a 52-week high of ₹129.7 on the BSE. The stock opened higher at ₹120.10 against Friday’s closing price of ₹119.45. On the volume front, as many as 24 lakh shares changed hands over the counter as compared to the two-week average volume of 10.13 lakh stocks. The market capitalisation climbed to ₹26,152.8 crore.

The stock, however, lost some steam after the bank refuted merger rumors. It settled day’s trade at 123.40, up 3.3% on the BSE.

Similarly, Kotak Mahindra Bank also saw buying, with share price rising 1.97% to touch a high of ₹1,956.15, before closing at ₹1,934.25, up 0.83% on the BSE. In comparison, the BSE Sensex settled 443 points higher at 59,246 levels.

Incorporated in 1931, Federal Bank is a mid-sized private bank headquartered in Aluva, Kochi. The bank has nearly 1,300 branches spread across the country, while it also has representative offices abroad in Abu Dhabi, Qatar, Kuwait, Oman, and Dubai. The bank’s total business mix (deposits + advances) stood at ₹3.35 lakh crore as on June 30, 2022. The bank’s Capital Adequacy Ratio (CRAR), computed as per Basel III guidelines, stood at 14.57% at the end of the June quarter of 2022.

In the April-June quarter of the current fiscal (Q1 FY23), Federal Bank reported its highest ever quarterly profit of ₹600.66 crore, compared to ₹367.29 crore in the same quarter last year, registering a yearly growth of 63.5%. Net interest income rose by 13% to 1,605 crore, from 1,418 crore in the corresponding period last year. Net interest margin stood at 3.22% for Q1 FY23.

On the other hand, Kotak Mahindra Bank is India's fourth largest private sector bank by assets and by market capitalisation. In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the Kotak Mahindra Group Group’s flagship company, received a banking license from the Reserve Bank of India (RBI), becoming the first non-banking finance company in India to convert into a bank – Kotak Mahindra Bank. As on June 30, 2022, Kotak Mahindra Bank had a national footprint of 1,702 branches and 2,761 ATMs, and branches in GIFT City and DIFC (Dubai).

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