Private lender reports higher profit and stronger asset quality, while net profit comes in marginally below estimates
Federal Bank Ltd. shares rose nearly 5% on Friday after the private lender reported higher profit for the quarter ended June 2026, driven by growth in net interest income and lower provisions. The bank also reported an improvement in asset quality, although its net profit came in marginally below analysts' estimates.
Investors are assessing the lender's earnings for signs of sustained growth, with a focus on loan growth, net interest margins, provisioning trends and management commentary.
The stock was trading at about Rs 341.5 on the NSE, up nearly 5% from its previous close of Rs 326.6.
Profit Rises On Higher NII
Federal Bank reported a net profit of Rs 1,177 crore for the June quarter, up 36.6% from Rs 862 crore a year earlier. The figure was slightly below the estimate of Rs 1,186 crore.
Net interest income rose 26.1% year on year to Rs 2,946 crore from Rs 2,337 crore, exceeding the estimate of Rs 2,851 crore.
The bank reduced provisions to Rs 317 crore from Rs 400 crore in the corresponding quarter last year, while its tax expense increased to Rs 402.7 crore from Rs 294.4 crore.
The bank said net profit increased 36.6% year on year to Rs 1,177 crore, while net interest income rose 26.1% to Rs 2,946 crore.
Asset Quality Improves
Federal Bank's asset quality strengthened during the quarter. Its gross non-performing asset ratio improved to 1.52% from 1.62% in the previous quarter, while the net non-performing asset ratio declined to 0.18% from 0.20% sequentially.
Lower provisions and better asset quality indicate continued stability in the bank's loan book, a key measure tracked by investors in private sector banks.
Stock Gains Over Past Year
Federal Bank shares have gained more than 61% over the past 12 months and are up more than 28% so far in 2026.
At the previous session's close, the lender had a market capitalisation of Rs 84,730 crore and traded at a price-to-earnings multiple of 17.9 times.
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