- Federal Bank reported its highest-ever quarterly profit of Rs 1,386.09 crore in Q2FY27, up 45.10% YoY
- Net interest income rose 26.38% YoY to Rs 3,153.40 crore, with net interest margin expanding to 3.32%
- Total business crossed Rs 6.4 lakh crore, with deposits up 18.61% and advances up 21.66% YoY
Federal Bank reported its highest-ever quarterly net profit of Rs 1,386.09 crore in Q2FY27, up 45.10% year-on-year (YoY) and 17.77% quarter-on-quarter (QoQ).
Net interest income (NII) rose 26.38% YoY to Rs 3,153.40 crore, while operating profit increased 35.35% to Rs 2,225.37 crore. Earnings per share grew 44.34% YoY to Rs 22.26.
Net interest margin (NIM) expanded 26 basis points (bps) YoY to 3.32%, supported by a 40 bps decline in the cost of funds and a 39 bps reduction in the cost of deposits to 5.18%.
Other income touched a record Rs 1,490.44 crore, rising 37.73% YoY, while fee income increased 31.86% to Rs 1,167.71 crore. Fee income as a proportion of average earning assets reached an all-time high of 1.11%.
The bank's total business franchise crossed Rs 6.4 lakh crore, growing 20.12% YoY. Total deposits rose 18.61% to Rs 3,42,693.56 crore, while gross advances crossed the Rs 3 lakh crore mark to reach Rs 3,01,687.80 crore, up 21.66% YoY.
CASA balances increased 22.56% to Rs 1,09,803.15 crore, taking the CASA ratio up 103 bps to 32.04%.
Asset Quality Improves
Asset quality strengthened further, with gross NPA declining to 1.32% and net NPA to 0.17%, both at decade lows.
Fresh slippages fell 27.48% YoY, while 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 19 bps YoY to 0.31%. The restructured book stood at Rs 1,389.55 crore, equivalent to 0.46% of gross advances.
Growth remained broad-based across the bank's chosen segments. Gold loans grew 37.13% YoY, loans against property (LAP) increased 32.21%, credit cards rose 28.27%, and commercial banking expanded 25.46%.
The cost-to-income ratio improved 196 bps to 52.08%. Return on assets (RoA) stood at 1.32%, up 23 bps YoY, while return on equity (RoE) rose 256 bps to 13.57%. The capital adequacy ratio stood at 16.84%, with Tier I capital at 15.76%.
What Did The Management Say?
On Q2 show, managing director and chief executive officer KVS Manian said, “This quarter marks several milestones for the Bank: our highest-ever profit, our total business franchise now stands at over Rs 6.4 lakh crore and advances crossing Rs 3 lakh crore. 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.”
He added, “Gross and net NPA are at their lowest levels in a decade, slippages are down 27% and provision coverage stands at 87%. We are growing faster while keeping the quality of the book intact.”
Manian said the bank's chosen segments were delivering as intended, while its CASA and non-resident (NR) franchises continued to deepen. He added that the bank was entering the second half of the financial year with a strong capital position, a granular balance sheet and healthy momentum in its core business.
The bank added 12 branches during the quarter, taking its network to 1,662 banking outlets.
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