BANK EARNINGS
Federal Bank Q2 Profit Rises 45% to Record Rs 1,386 Crore
Federal Bank reported record September-quarter net profit of Rs 1,386 crore, supported by stronger interest income and expanding loans and deposits. Asset quality also improved, while management expressed confidence in the bank’s margin trajectory.
BharatVox ·
Record earnings as interest income strengthens
Federal Bank’s net profit reached Rs 1,386 crore in the quarter ended September, its highest quarterly earnings, as stronger interest income accompanied double-digit growth in lending and deposits. Profit increased 45% from Rs 955 crore a year earlier, according to Economic Times Markets.
The earnings expansion came alongside better asset-quality indicators: both gross and net bad-loan ratios declined, fresh slippages eased and provision coverage strengthened. Higher other income also supported the quarterly performance, although the supplied results account did not give a separate figure for that contribution.
Net interest income—the difference between interest earned and interest paid—rose 26% to Rs 3,153 crore from Rs 2,495 crore. Net interest margin increased to 3.32% from 3.06%, an improvement of 26 basis points. The figures show that the bank’s larger lending book was accompanied by a stronger interest margin, rather than growth in business volumes alone.
BharatVox Graphic
September-quarter growth at a glance
Year-on-year growth to Rs 1,386 crore.
Year-on-year growth to Rs 3,153 crore.
Year-on-year growth to Rs 2.98 lakh crore.
Year-on-year growth to Rs 3.43 lakh crore.
Management confident on margins despite FCNR impact
Managing director and chief executive KVS Manian attributed the performance to deposit-side momentum, disciplined lending growth, fee income and operating efficiency during the post-earnings media call. His comments placed funding, asset growth and cost discipline together at the centre of the quarter’s performance.
Foreign Currency Non-Resident, or FCNR, deposit mobilisation had some effect on margins, Manian acknowledged. However, he said management remained confident about sustaining the bank’s net interest margin trajectory and did not expect a significant impact from those deposits. That is management’s assessment of the outlook, not a guarantee of future margins.
Federal Bank raised Rs 14,922 crore in FCNR deposits through the Reserve Bank of India’s special window during the period. At September-end, it also had Rs 9,438 crore in loans against FCNR deposits. These figures highlight the scale of foreign-currency deposit mobilisation within the quarter’s funding activity.
Lending expands across retail and business segments
Net advances increased 22% year-on-year to Rs 2.98 lakh crore from Rs 2.45 lakh crore. Growth extended across the reported retail, corporate and commercial portfolios, although the pace differed by segment.
Retail customer assets rose 18% to Rs 79,714 crore from Rs 67,600 crore. The corporate and institutional banking portfolio expanded 17% to Rs 1.05 lakh crore, compared with Rs 89,312 crore a year earlier. Commercial banking lending grew faster than either of those segments, increasing 25% to Rs 32,780 crore from Rs 26,129 crore.
For readers tracking credit availability in India, the segment figures provide a more useful picture than the headline advances number alone: the expansion was not confined to a single reported borrower category. They do not, however, establish how individual industries or regions performed, since that breakdown was not supplied.
Deposits grow, with non-resident funding prominent
Total deposits climbed 19% to Rs 3.43 lakh crore from Rs 2.89 lakh crore, while retail deposits increased 16% to Rs 2.49 lakh crore. Overall lending growth therefore exceeded deposit growth in percentage terms, even as both sides of the balance sheet expanded.
Non-resident deposit mobilisation remained a notable contributor. The report described the bank’s NRE deposit figure as including FCNR deposits and put that combined reported measure at Rs 1.09 lakh crore, up 27% from Rs 86,055 crore. That grouping is retained here as reported, rather than treated as a separate breakdown of the two deposit categories.
The figures underline the relevance of overseas Indian depositors to the bank’s funding mix. Alongside domestic retail deposits, this pool of funding formed part of the liability-side momentum cited by management.
Bad-loan indicators improve; no acquisition announced
The gross non-performing asset ratio fell 51 basis points to 1.32% from 1.83%, while the net NPA ratio declined to 0.17% from 0.48%. Provision coverage, excluding technical write-offs, increased to 86.78% from 73.45%, indicating greater coverage of recognised bad loans.
Fresh slippages dropped about 28% to Rs 420 crore from Rs 579 crore. The annualised slippage ratio improved to 59 basis points from 94 basis points, and credit cost declined to 31 basis points from 50 basis points. Total provisions, including tax, nevertheless rose 22% to Rs 839 crore from Rs 689 crore; that broader measure should not be confused with credit cost alone.
On potential acquisitions, Manian said the lender continued to assess financial-services opportunities, including core banking and universal banking. He added that there was “nothing just now to report”. No transaction was announced in the supplied account, leaving the margin outlook and continuing business performance as the substantive operational updates rather than any confirmed acquisition plan.
Who's who
KVS Manian
Managing director and chief executive officer, Federal Bank
Fact-check this story · Source: Economic Times Markets: Federal Bank Q2 profit jumps 45% to record Rs 1,386 crore. This AI-assisted account is based on the linked source, not independent on-the-ground reporting by BharatVox. Any opinion is separately labelled.
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