Federal Bank Q2 FY27 Profit Surges 45% to Record ₹1,386 Cr, NPA at Decadal Lows

Total business crosses ₹6 lakh crore | Gross advances cross ₹3 lakh crore | NII up 26% | CASA up 23% | Fee income at all-time high, up 32% | RoA at 1.32%

Federal Bank today reported net profit of ₹1,386.09 crore for the quarter ended 30 September 2026 (Q2 FY27), up 45.10% over the corresponding quarter of the previous year. This is the highest quarterly profit in the Bank’s history. The core franchise drove the earnings growth: net interest income grew 26.38%, fee income grew 31.86%, and gross and net NPA both reached decadal lows.

Key Highlights – Q2 FY27

• Profitability: Net profit ₹1,386.09 crore, highest ever, up 45.10% YoY and 17.77% QoQ. EPS rose 44.34% to ₹22.26. Operating profit grew 35.35% to ₹2,225.37 crore.
• Core Earnings Engine: Net Interest Income grew 26.38% to ₹3,153.40 crore, ahead of advances growth of 21.66%.
• Margin Expansion: NIM expanded 26 bps YoY to 3.32%. Cost of Funds fell 40 bps YoY. Cost of Deposits declined 39 bps YoY to 5.18%.
• Record Other Income: Other income reached ₹1,490.44 crore, up 37.73% YoY. Fee income grew 31.86% to ₹1,167.71 crore. Fee income to average earning assets at all-time high of 1.11%.
• Asset Quality: Gross NPA improved to 1.32% and Net NPA to 0.17%, both decadal lows.
• Fortified Coverage: PCR (excluding TWO) strengthened to 86.78%, up 1,333 bps YoY. Coverage including technical write-offs at 94.49%. Credit cost declined 19 bps YoY to 0.31%.
• Balance Sheet Scale: Total business franchise over ₹6.4 lakh crore, up 20.12% YoY. Deposits ₹3,42,693.56 crore, up 18.61% YoY. Gross advances ₹3,01,687.80 crore, up 21.66% YoY.
• CASA Franchise: CASA balances ₹1,09,803.15 crore, up 22.56% YoY. CASA ratio improved 103 bps YoY to 32.04%. Average CASA crossed ₹1 lakh crore.
• NR Franchise: NR deposits ₹1,19,055.98 crore, up 26.63% YoY. FCNR(B) deposits rose 239.14% YoY to ₹23,547.72 crore.
• Chosen Segments: Gold Loans grew 37.13% YoY; LAP grew 32.21% YoY; Credit Cards grew 28.27% YoY; Commercial Banking grew 25.46% YoY; CV/CE grew 21.74% YoY; Corporate & Institutional Banking grew 17.19% YoY to ₹1,04,666.02 crore; Business Banking returned to growth at 12.39% YoY.
• Operating Efficiency: Cost-to-Income ratio improved 196 bps YoY to 52.08%.
• Return Metrics: RoA improved 23 bps YoY to 1.32%. RoE expanded 256 bps YoY to 13.57%. Book value per share grew 17.48% YoY to ₹166.32.
• Capital: CRAR at 16.84% and Tier I at 15.76%, up 113 bps and 139 bps YoY.
• Network: 12 branches added, total 1,662 outlets.

MD & CEO’s Comment

This quarter marks several milestones for the Bank: our highest-ever profit, our total business franchise now stands at over ₹6.4 lakh crore and advances crossing ₹3 lakh crore. More importantly, the growth is coming from the core. Net interest income grew 26% and fee income 32%, and fee income relative to our earning assets is at an all-time high.

“Gross and net NPA are at their lowest levels in a decade, slippages are down 27% and provision coverage stands at 87%. We are growing faster while keeping the quality of the book intact.

“Our chosen segments are delivering as intended, and the CASA and NR franchises continue to deepen. As the rate environment turns, we enter the second half of the year with a strong capital position, a granular balance sheet and good momentum in our core business.

Asset Quality and Resilience

Gross and net NPA at decadal lows. Fresh slippages declined 27.48% YoY, slippage ratio improved to 0.59% from 0.94%. Restructured book reduced to ₹1,389.55 crore, or 0.46% of gross advances. Balanced approach to risk and shift towards secured, granular segments provide buffer against uncertainty.