Federal Bank Q2 net profit rises 11% QoQ to ₹955 crore; NII hits record high  

Federal Bank has delivered another strong quarter for the period ended September 30, 2025 (Q2FY26), reporting record-high net interest income (NII) and fee income, as well as consistent growth across core banking metrics.

For the July-September quarter of the current fiscal, the private lender’s net profit rose 10.85% sequentially to ₹955.26 crore, driven by higher operating income and improved efficiency. Operating profit stood at ₹1,644.17 crore, registering a 5.65% growth quarter-on-quarter.

According to the bank, the lender reported its highest-ever NII at ₹2,495 crore, supported by sustained loan growth and stable yields. Non-interest revenue also remained strong, with fee income touching an all-time high of ₹886 crore. The net interest margin (NIM) improved 12 basis points QoQ to 3.06%.

Commenting on the quarterly performance, Managing Director & CEO K.V.S. Manian said, “Over the past few quarters, we’ve undertaken several strategic reorientations to strengthen our foundation and build for the future—and the results are beginning to show.”

He added, “Our CASA franchise continues to demonstrate sustained and meaningful growth, reflecting the trust of our customers and the consistency of our team’s execution. We’re also broadening our asset mix thoughtfully, increasing the share of our mid-yield portfolio in a measured and disciplined way. At the same time, our fee income has seen strong, double-digit sequential growth, underscoring the breadth and resilience of our earnings.”

Manian further noted that the bank’s asset quality remains solid, supported by prudent risk management and a balanced approach to growth. “As we look ahead, we’re shaping an organisation that’s agile in its thinking, disciplined in its actions, and firmly anchored in the stability and values that define Federal Bank,” he said.

On the asset quality front, the gross non-performing assets (GNPA) ratio stood at 1.83% and the net NPA ratio at 0.48%. The provision coverage ratio (PCR) stood at a robust 73.45%, demonstrating the bank’s prudent provisioning approach and risk discipline. The Capital to Risk-Weighted Assets Ratio (CRAR) was strong at 15.71%.

Federal Bank’s return on assets (ROA) stood at 1.09%, while return on equity (ROE) came in at 11.01%, reflecting sustained profitability and efficient capital utilisation.

On the liabilities front, the bank reported a steady improvement in its low-cost deposit base. The CASA ratio improved to 31.01%, up 94 basis points year-on-year, supported by robust growth in both savings and current accounts. CASA deposits increased 10.71% YoY to ₹89,591 crore, showcasing continued customer confidence and franchise strength.

Total deposits grew 7.36% YoY, while net advances rose 6.23% YoY, indicating balanced expansion across lending segments. The growth in deposits and advances highlights the bank’s ability to sustain momentum amid evolving market conditions.