Federal Bank share slide 5% on hitting pause on co-branded credit cards

So far this year, the stock of Federal Bank has tumbled over 5 percent, as against 2 percent drop in the Bank Nifty index

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26 Aug, 2025 12:21

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Shares of Federal Bank declined more than 5 percent on March 14 after the lender stopped issuing co-branded credit cards on the directions of the Reserve Bank of India (RBI).

Federal Bank has tumbled over 5 percent this year against a 2 percent drop in the Bank Nifty index. Federal Bank touched 52-week high of Rs 166 on February 19.

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Federal Bank notified that though it would stop issuing new co-branded credit cards, it would continue to service existing customers.

Co-branded credit cards are issued by a financial institution in partnership with another company, typically a retailer, airline, hotel chain, or other businesses. These cards typically carry the logo of both the financial institution and the partner company.

According to RBI norms, the co-branding partner shall not have access to information relating to transactions undertaken through the co-branded card. Post issuance of the card, the co-branding partner shall not be involved in any of the processes or the controls relating to the co-branded card except for being the initial point of contact in case of grievances.

ALSO READ: Federal Bank, South Indian Bank announce measures on co-branded credit cards

Analysts at Nomura said the RBI restrictions are unlikely to have a near-term NIM impact. However, sustainable scale-up of unsecured retail (via fintech partnerships) is a key driver for incremental loan growth and NIM expansion over FY24-26F, they added.

"Federal Bank trades at an attractive valuation of 0.9x FY26F BVPS. We retain our positive stance, valuing the bank at 1.2x Dec-25F BVPS to arrive at our target price of Rs 190 per share," the brokerage firm added.

At 12.15 pm, Federal Bank  was trading at Rs146.35 on NSE, down 1.45 percent from the previous close.

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