Federal Bank's Q3FY26 results: Net profit rises 9% to ₹1,041 crore

Federal Bank posted a near 9% rise in Q3 FY26 profit, driven by higher income, better margins and improving asset quality, with growth momentum set to continue

Federal Bank on Friday posted an 8.98 per cent year-on-year (YoY) rise in net profit to Rs 1,041 crore for the October–December quarter of FY26 (Q3 FY26), from Rs 955 crore in the year-ago period, aided by healthy growth in income.

 

The bank’s profit in Q2 FY26 stood at Rs 955 crore.

 

Net interest income (NII) increased 9.11 per cent YoY to Rs 2,653 crore from Rs 2,431 crore in Q3 FY25. The bank’s net interest margin (NIM) improved to 3.18 per cent in Q3 FY26 from 3.11 per cent in Q3 FY25. Non-interest income grew by 20 per cent YoY to Rs 1,100 crore.

 

 

The bank recorded 10.94 per cent YoY growth in advances to Rs 2.56 trillion as of December 31, 2025, led by commercial banking and corporate and institutional banking. Deposits were up 11.8 per cent YoY to Rs 2.97 trillion. The current account savings account (CASA) ratio improved to 32.07 per cent, up 106 basis points sequentially and 191 basis points YoY, with CASA balances growing 18.86 per cent to Rs 95,498 crore.

 

On advances, the bank is focusing on medium-yielding assets — commercial vehicles, loan against property (LAP) and the gold loan segment, among others — which are growing faster.

 

“On advances and deposits, our intention is to continue to maintain the growth momentum we have already gathered over the last two to three quarters. The current trajectory will remain. It will be around the high teens,” said KVS Manian, managing director and chief executive officer, Federal Bank, during the post-earnings media call.

 

The asset quality of the lender improved, with the gross non-performing assets (GNPA) ratio dropping to 1.72 per cent as of December 31, 2025, compared to 1.83 per cent as of September 30, 2025. The net NPA ratio was also down to 0.42 per cent as of December 31, 2025, compared to 0.48 per cent as of September 30, 2025. Slippages in the quarter fell to Rs 435 crore from Rs 485 crore in Q3 FY25 and Rs 579 crore in Q2 FY26.

 

The capital to risk-weighted assets ratio (CRAR) stood at 15.20 per cent in Q3 FY26, compared to 15.16 per cent in Q3 FY25. It was 15.71 per cent in Q2 FY26. The lender expects the first tranche of capital from Blackstone’s investment to improve the CRAR by nearly 50 basis points. This is expected in the fourth quarter of the financial year (Q4 FY26), with the remaining capital infusion to come in by FY28.

 

“The impact on CRAR will be approximately 50 basis points if the first tranche comes in this Q4. But that is structured in such a way that we get 25 per cent first and then the balance after 18 months. So the remaining will come only in FY28,” said V Venkatraman, chief financial officer (CFO) of the bank. Blackstone is set to invest about Rs 6,196 crore in the bank through a preferential issue of convertible warrants, giving up to 9.99 per cent stake.

 

On reports of Federal Bank looking to acquire a stake in Deutsche Bank India’s retail and wealth portfolios, Manian said it continues to evaluate inorganic opportunities but does not have any specific opportunity to disclose.

 

“We do not have any specific opportunity to disclose. We keep looking for opportunities that are attractive to us and our shareholders. We will announce if there is any need for that,” Manian said.