Kochi, October 16, 2026: Federal Bank reported a 45.10% year-on-year rise in net profit to ₹1,386.09 crore for the quarter ended September 30, 2026 (Q2 FY27), marking its highest-ever quarterly profit. The bank’s gross and net non-performing assets (NPA) reached decadal lows during the period, supported by strong growth in core earnings.
The lender’s net interest income increased 26.38% to ₹3,153.40 crore, outpacing advances growth of 21.66%. Fee income rose 31.86% to ₹1,167.71 crore, while total other income reached a record ₹1,490.44 crore, up 37.73% year-on-year. Operating profit for the quarter stood at ₹2,225.37 crore, up 35.35%.
Asset quality and business growth
Gross NPA improved to 1.32% and net NPA to 0.17%, reflecting year-on-year improvements of 51 basis points and 31 basis points respectively. The provision coverage ratio (excluding technical write-offs) strengthened to 86.78%, up 1,333 basis points from a year ago, while coverage including technical write-offs stood at 94.49%. Credit cost declined 19 basis points to 0.31%.
Total business crossed ₹6.4 lakh crore, up 20.12% year-on-year. Total deposits reached ₹3,42,693.56 crore, a rise of 18.61%, while gross advances surpassed ₹3 lakh crore to ₹3,01,687.80 crore, up 21.66%. The bank added 12 branches in the quarter, expanding its network to 1,662 outlets.
CASA and NR franchise performance
Current and savings account (CASA) balances grew 22.56% to ₹1,09,803.15 crore, with the CASA ratio improving 103 basis points to 32.04%. Average CASA crossed ₹1 lakh crore. Non-resident (NR) deposits, including NRE and ONR, rose 26.63% to ₹1,19,055.98 crore, while FCNR(B) deposits surged 239.14% to ₹23,547.72 crore.
Segment-wise advances and efficiency metrics
Granular, higher-yielding segments led growth: gold loans rose 37.13%, loans against property (LAP) increased 32.21%, credit cards grew 28.27%, commercial banking expanded 25.46%, and commercial vehicle/construction equipment (CV/CE) lending was up 21.74%. Corporate and institutional banking advances grew 17.19% to ₹1,04,666.02 crore, while business banking returned to growth at 12.39%.
The cost-to-income ratio improved by 196 basis points to 52.08%. Return on assets (RoA) increased 23 basis points to 1.32%, and return on equity (RoE) expanded 256 basis points to 13.57%. Book value per share grew 17.48% to ₹166.32. The capital adequacy ratio (CRAR) stood at 16.84%, with Tier I capital at 15.76%.
Management commentary and outlook
Managing Director and CEO KVS Manian said the quarter marked several milestones, including the highest-ever profit and advances crossing ₹3 lakh crore. “Net interest income grew 26% and fee income 32%, and fee income relative to our earning assets is at an all-time high,” Manian said. He added that gross and net NPA were at their lowest levels in a decade, with slippages down 27% and provision coverage at 87%.
Asset quality continued to improve, with fresh slippages declining 27.48% to a slippage ratio of 0.59%. The restructured book reduced to ₹1,389.55 crore, or 0.46% of gross advances. The bank said its focus on secured, granular segments provides a buffer against external uncertainty.
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