Federal Bank Q1 Results: Federal Bank reported its June quarter (Q1 FY27) results on Friday, 17 July, with net profit rising 36.5% year-on-year to ₹1,177 crore, driven by robust growth in net interest income and an improvement in asset quality.
The private sector lender’s net interest income (NII) increased 26% to ₹2,946 crore from ₹2,336 crore a year ago.
Asset quality strengthened sequentially, with gross non-performing assets (GNPA) improving to 1.52% from 1.62% in the previous quarter, while net NPA (NNPA) declined to 0.18% from 0.20%.
The bank also reported a sharp decline in provisions, which stood at ₹317.7 crore, compared with ₹741 crore in the March quarter and ₹400 crore in the corresponding period last year.
The bank said its net interest margin (NIM) expanded 39 basis points year-on-year to 3.33%, supported by a 60-basis-point decline in the cost of funds, which more than offset a 44-basis-point compression in asset yields. The cost of deposits also eased 57 basis points year-on-year to 5.21%.
Federal Bank said its asset quality improved to its strongest level in recent history, with net NPA falling to a decadal low of 0.18%. In absolute terms, net NPAs declined 56.3% year-on-year to ₹506.04 crore, while gross NPA improved to 1.52%. Fresh slippages dropped 37.8% year-on-year to ₹409.48 crore, with the slippage ratio improving to 0.61% from 1.11% a year earlier.
The bank further said its Provision Coverage Ratio (PCR), excluding technical write-offs, strengthened to 87.37%, up 1,296 basis points from a year ago, while credit cost declined 24 basis points to 0.41%. Including technical write-offs, the coverage ratio stood at 94.23%.
On the liability side, CASA balances increased 18.26% year-on-year to ₹1.03 lakh crore, outpacing overall deposit growth. As a result, the CASA ratio improved by 188 basis points to 32.23%.
The bank also highlighted that its restructured loan book reduced to ₹1,541.3 crore, or 0.55% of gross advances. It attributed the improvement in asset quality to its balanced risk management strategy and an increased focus on secured and granular lending segments, which it said provide resilience against external uncertainties.
