 "Federal Bank Q2 FY26 results: Net profit falls 9.6% to ₹955 crore")
Private sector lender Federal Bank reported a 9.6 per cent year-on-year (Y-o-Y) decline in its net profit to Rs 955 crore for the July-September quarter of the financial year 2025-26 (Q2FY26) due to higher provisions for unsecured loans.
Net Interest income rose 5.4 per cent Y-o-Y to Rs 2,495 crore, with growth in net advances remaining in single digit at 6.23 per cent.
Net interest margin fell to 3.06 per cent as compared to 3.12 per cent in Q2FY25, while on a sequential basis, the interest margin expanded by 12 basis points.
KVS Manian, managing director and CEO of Federal Bank, said in the post earnings press conference that the bank had started making accelerated provisions for unsecured lending since the third quarter of last financial year which is impacting net profit.
Provisions rose to Rs 689 crore in Q2FY26 from Rs 509 crore in Q2FY25.
Chief Financial Officer of the bank, Venkatraman Venkateswaran, said the 12-bps margin improvement sequentially was driven by lower deposit and borrowing costs, benefits from the reduction in cash reserve ratio.
Other income went up 12 per cent to Rs 1,082 crore, mainly driven by 13 per cent rise in fee income to Rs 886 crore.
The bank’s asset quality improved further during the quarter, with gross non-performing assets (GNPA) easing to 1.83 per cent from 2.09 per cent a year ago, and net NPA at 0.48 per cent versus 0.57 per cent.
Federal Bank’s total deposits rose 7.4 per cent Y-o-Y to Rs 2.89 lakh crore as of September 30, 2025. The current account savings account (CASA) ratio improved 94 basis points to 31.01 per cent, with CASA deposits up 10.7 per cent to Rs 89,591 crore.
Separately, the bank said the board will consider raising funds via right issue, preferential allotment, qualified institutions placement, or any other mode on October 24.