Federal Bank Q2 profit jumps 45% to record ₹1,386 crore; gross NPA falls to decade-low 1.32%
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Federal Bank reported a record net profit of ₹1,386.09 crore for the second quarter of FY27, marking a 45.10% year-on-year (YoY) increase and a 17.77% rise sequentially. The private sector lender’s operating profit grew 35.35% YoY to ₹2,225.37 crore, while earnings per share increased 44.34% to ₹22.26 for the quarter ended September 30, 2026.
The bank’s total business franchise crossed ₹6.4 lakh crore, growing 20.12% YoY, as gross advances surpassed ₹3 lakh crore. Net interest income (NII) rose 26.38% to ₹3,153.40 crore, outpacing credit growth of 21.66%. Other income reached an all-time high of ₹1,490.44 crore, up 37.73%, while fee income climbed 31.86% to ₹1,167.71 crore.
Margins expand as deposits gain momentum
Net interest margin (NIM) expanded 26 basis points (bps) YoY to 3.32%. The cost of funds declined 40 bps, while the cost of deposits fell 39 bps to 5.18%.
Total deposits increased 18.61% to ₹3,42,693.56 crore. Current account and savings account (CASA) balances grew 22.56% to ₹1,09,803.15 crore, lifting the CASA ratio by 103 bps to 32.04%. Non-resident deposits rose 26.63% to ₹1,19,055.98 crore, while FCNR(B) deposits surged 239.14% to ₹23,547.72 crore.
Managing Director and CEO KVS Manian said, “More importantly, the growth is coming from the core. Net interest income grew 26% and fee income 32%, and fee income relative to our earning assets is at an all-time high.”
Asset quality improves to decade-best levels
Gross non-performing assets (NPA) declined 51 bps YoY to 1.32%, while net NPA fell 31 bps to 0.17%. Fresh slippages dropped 27.48%, and the slippage ratio improved to 0.59% from 0.94% a year earlier. The provision coverage ratio, excluding technical write-offs, rose to 86.78%, while credit cost declined to 0.31%.
“Gross and net NPA are at their lowest levels in a decade, slippages are down 27% and provision coverage stands at 87%,” Manian said.
Retail and business banking drive growth
Gold loans grew 37.13% YoY, loans against property increased 32.21%, and credit cards expanded 28.27%. Commercial banking grew 25.46%, while corporate and institutional banking rose 17.19% to ₹1,04,666.02 crore. Business banking returned to growth, increasing 12.39%.
Return on assets improved 23 bps to 1.32%, while return on equity rose 256 bps to 13.57%. The cost-to-income ratio improved to 52.08%. Capital adequacy stood at 16.84%, with Tier I capital at 15.76%. The bank added 12 branches during the quarter, taking its network to 1,662 banking outlets.