Financial Performance Overview

Federal Bank reported unaudited financial results for Q1 FY27 (quarter ended June 30, 2026) showing strong growth across key metrics.

Profitability:

  • Net profit reached ₹1,176.93 crore, up 36.57% year-over-year (YoY), representing a record quarterly profit on an underlying basis.
  • Earnings per share (EPS) rose 36.06% YoY to ₹19.15.
  • Return on Assets (RoA) improved 22 basis points YoY to 1.22%.
  • Return on Equity (RoE) expanded 171 basis points YoY to 12.01%.
  • Book value per share grew 17.02% YoY to ₹161.87.

Core Earnings:

  • Net Interest Income (NII) grew 26.06% YoY to ₹2,945.89 crore.
  • This growth significantly outpaced advances growth of 14.94%, indicating margin expansion.
  • Fee income showed strong growth of 21.71% YoY.
  • Treasury income remained subdued during a volatile market period.

Margin Performance:

  • Net Interest Margin (NIM) expanded 39 basis points YoY to 3.33%.
  • Cost of Funds fell 60 basis points against a 44 basis point compression in asset yield.
  • Cost of Deposits declined 57 basis points YoY to 5.21%.

Asset Quality (Historic Best):

  • Net NPA ratio improved to 0.18%, a decadal low for the Bank.
  • Absolute Net NPA decreased 56.29% YoY to ₹506.04 crore.
  • Gross NPA ratio improved to 1.52%.
  • Fresh slippages fell 37.79% YoY to ₹409.48 crore.
  • Slippage ratio improved to 0.61% from 1.11% a year ago.
  • Restructured book reduced to ₹1,541.30 crore, representing 0.55% of gross advances.

Provision Coverage:

  • Provision Coverage Ratio (excluding technical write-offs) strengthened to 87.37%, up 1,296 basis points YoY.
  • Coverage including technical write-offs stands at 94.23%.
  • Credit cost declined 24 basis points to 0.41%.

Balance Sheet Growth:

  • Total business reached ₹5,97,615.83 crore, up 13.05% YoY, approaching the ₹6 lakh crore milestone.
  • Total deposits stood at ₹3,20,117.66 crore, growing 11.37% YoY.
  • Gross advances reached ₹2,81,239.54 crore, growing 14.94% YoY.

Deposit Franchise:

  • CASA balances reached ₹1,03,163.15 crore, up 18.26% YoY.
  • CASA ratio improved 188 basis points YoY to 32.23%.
  • NR deposits (NRE and ONR) reached ₹1,05,123.41 crore, up 14.24% YoY, building on the ₹1 lakh crore milestone crossed last quarter.

Segment Performance:

The Bank's chosen segments showed strong momentum:

  • Commercial Banking: 22.96% YoY growth
  • CV/CE: 21.07% YoY growth
  • Gold Loans: 33% YoY growth
  • LAP: 21% YoY growth
  • Credit Cards: 36% YoY growth
  • Corporate & Institutional Banking: 16.12% YoY growth, surpassing ₹1 lakh crore mark

Operating Efficiency:

  • Cost-to-Income ratio improved 239 basis points YoY to 52.50%.
  • This improvement was achieved while absorbing the annual wage revision.

Network Expansion:

  • 10 branches were added during the quarter.
  • Total network reached 1,650 outlets.

Management Commentary

Mr. KVS Manian, Managing Director & CEO, commented on the performance:

"This quarter demonstrates something important about the franchise we have been building. Our profit grew nearly 37% in a period when treasury had a challenging period, which tells you that the earnings are coming from the core business, not from market gains. Net interest income growing 26% against advances growth of 15% represents the expansion in our NIMs, which has been a core focus for the bank."

"Our net NPA at 0.18% is the lowest in the Bank's recent history, and simultaneously provision coverage ratio stands at 87%. We are building a resilient balance sheet through a combination of lower credit cost and a strong buffer out of our current earnings."

"Our chosen advance segments are delivering as intended, and the NR and CASA franchises continue to deepen. We enter the rest of the year with our capital position strong, our asset quality at its decadal best, and good momentum in our core business."

Additional Information

  • The results are presented on a BAU basis, excluding the one-off windfall gain recorded in Q4 FY26.
  • An investor presentation is available on the Bank's website at https://www.federalbank.in/financial-result.
  • For further information, contact Mr. Venkatraman Venkateswaran, Executive Director.