Why Federal Bank could remain the preferred mid-cap banking stock?

Despite the marginal blip in Q3, the bank scores ahead of its peers such as Karnataka Bank and South Indian Bank

Mid-sized banks have in the past year caught substantial investor attention, because of the benign valuations and improving performance metrics. Among them, Federal Bank emerged as the preferred mid-cap banking stock. 

The bank’s robust leadership, ability to retain its dominance on home ground (Kerala) and yet effectively grow its presence in the retail and small business loan categories have been well-accepted by investors. This is why, even if investors could be a tad disappointed with the bank’s December quarter (Q3) results, which have marginally trailed the Street’s expectations, a majority of analysts remain positive on the stock. 

Net interest income