Federal Bank

Steady performance, utilize one-off gains to strengthen balance sheet with floating provisions

Federal Bank has reported 22% growth in net profit at Rs 1259.10 crore for the quarter ended March 2026 (Q4FY2026). Net Interest Income (NII) increased 33% while the core fee income of the bank also improved 23% in Q4FY2026. The financial results for Q4FY2026 have certain one-off including a significant interest income on IT refund of Rs 456 crore which has boosted the NII of the bank for Q4FY2026. The bank has utilized these gains for creating Rs 456 crore of floating provisions to strengthen balance sheet. The bank also had a one of reversals of tax provision of Rs 115 crore in Q4FY2026 boosting bottomline.

The Net Interest Margin (NIM) of the bank moved up to 3.20% in Q4FY2026 compared to 3.12% in the corresponding quarter of previous year. On business front, the business growth has remained steady in double digits at 10% at end March 2026, as the loan book growth improved to 10%. The CASA ratio of the bank has increased to 32.9% at end March 2026 from 30.2% at end March 2025.

NII growth improves as NIM rises, and boost from IT refund: Interest income increased 11% to Rs 7399.09 crore, while interest expenses fell 1% to Rs 4226.48 crore in Q4FY2026. NII improved 33% to Rs 3172.61 crore in Q4FY2026.

Margins improve: The bank has shown 55 bps YoY decline in cost of deposits to 5.43%, while yield on advances declined 66 bps YoY to 8.65% in Q4FY2026. Thus, the NIM has improved 8 bps YoY to 3.20%, while rose 2 bps qoq to 3.20% in Q4FY2026.

Healthy growth in the core fee income: The non-interest income of the bank increased 14% to Rs 1144.95 crore in Q4FY2026. Bank has posted strong 23% growth in core fee income to Rs 924 crore, while forex income moved up 37% to Rs 67 crore. The recoveries and other income improved 20% to Rs 142 crore, while the treasury income eased 86% to Rs 12 crore in Q4FY2026.

Expense ratio improves: The operating expenses of the bank increased 6% to Rs 2041.15 crore, as other expenses moved up 12% to Rs 1265.45 crore, while employee expenses fell 1% to Rs 775.7 crore in Q4FY2026. Cost to income ratio improved to 47.3% in Q4FY2026 compared with 56.7% in Q4FY2025. Operating Profit moved up 55% to Rs 2276.41 crore.

Provisions and contingencies increase: The bank has shown 437% increase in provisions to Rs 741 crore. The loan loss provisions moved up 409% to Rs 753 crore, while the bank has written back standard asset provisions of Rs 22 crore in Q4FY2026.

PBT increased 16% to Rs 1535.37 crore in Q4FY2026. Effective tax rate declined to 18.0% in Q4FY2026 from 22.4% in Q4FY2025. Net Profit increased 22% YoY to Rs 1259.10 crore in Q4FY2026.

Asset quality improves: The bank has improved asset quality in Q4FY2026.

The fresh slippages of loans stood at Rs 483 crore in Q4FY2026 compared with Rs 443 crore in previous quarter and Rs 492 crore in the corresponding quarter last year.

The recoveries and upgradations of NPAs were at Rs 273 crore, while the write-off of loans was at Rs 321 crore in Q4FY2026.

The standard restructured loan book of the bank declined to Rs 1083 crore end March 2026 compared to Rs 1140 crore a quarter ago.

Provision coverage ratio jumped to 87.07% at end March 2026 compared to 75.14% a quarter ago and 75.37% a year ago.

The capital adequacy ratio of the bank stood at 17.3% with Tier I ratio at 15.9% at end March 2026.

The risk weighted assets of the bank has increased 10% YoY to Rs 231126 crore end March 2026,

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Asset Quality Indicators: Federal Bank
?	Mar-26	Dec-25	Sep-25	Jun-25	Mar-25	Variation
						QoQ	YoY
Gross NPA (Rs Crore)	4335.29	4446.86	4532.01	4669.66	4375.54	-3	-1
Net NPA (Rs Crore)	529.25	1068.04	1165.16	1157.64	1040.38	-50	-49
% Gross NPA	1.62	1.72	1.83	1.91	1.84	-10	-22
% Net NPA	0.20	0.42	0.48	0.48	0.44	-22	-24
% PCR	87.07	75.14	73.45	74.41	75.37	1193	1170
% CRAR - Basel III	17.25	15.20	15.71	16.03	16.40	205	85
% CRAR - Tier I - Basel III	15.93	13.88	14.37	14.69	15.04	205	89
Variation in basis points for figures given in percentages and in % for figures in Rs crore

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Business Highlights:

Business growth improves: The business of the bank has increased at an accelerated pace of 10% YoY to Rs 586441 crore end March 2026, as advances growth improved to 10% to Rs 272532 crore and deposits growth moderated to 11% to Rs 313909 crore at end March 2026. With the slower growth in advances, the credit to deposit ratio eased to 86.8% at end March 2026 from 87.3% at end March 2025.

CASA deposits ratio improves: The CASA deposits of the bank increased 21% YoY to Rs 103390 crore at end March 2026. The current account deposits moved up 23% to Rs 25337 crore, while saving account deposits increased 20% to Rs 78053 crore end March 2026. The CASA ratio improved to 32.9% at end March 2026 compared to 30.2% at end March 2025, while increased from 32.1% at end December 2025. The term deposits have increased 6% to Rs 210519 crore end March 2026. The NRE deposits have galloped 12% to Rs 93660 crore end March 2026.

Strong loan growth: Within the loan book, the retail loans increased 9% YoY to Rs 112879 crore at end March 2026, while credit to agriculture increased 3% to Rs 8448 crore and MSME credit increased 11% to Rs 25993 crore. The corporate credit has also increased 17% to Rs 125213 crore end March 2026. The overseas credit has declined 0% to Rs 0 crore end March 2026. The share of retail, agriculture and MSME (RAM) eased to 54.1% at end March 2026 compared to 54.7% at end March 2025, while that of corporate loans rose to 45.9% at end March 2026 compared to 45.3% at end March 2025.

Investment book of the bank increased 16% YoY to Rs 76676 crore at end March 2026.

Branch expansion: The bank has added 39 branches and added 18 ATMs in Q4FY2026, taking overall tally to 1640 branches and 2112 ATM`s end March 2026.

Book value of the bank stood at Rs 157.0 per share at end March 2026, while the adjusted book value (net of NNPA and 10% of restructured advances) was Rs 154.4 per share at end March 2026.

Financial Performance FY2026:

Bank has posted 2% increase in net profit to Rs 4117.32 crore in the year ended March 2026 (FY2026). The net interest income increased 13% to Rs 10657.41 crore, while non-interest income moved up 17% to Rs 4440.39 crore, leading net total income to increase 14% to Rs 15097.80 crore in FY2026. The operating expenses increased 10% to Rs 7891.60 crore, while provision and contingencies jumped 151% to Rs 1836.67 crore. PBT increased 0% to Rs 5369.53 crore in FY2026. The cost-to-income ratio improved to 52.3% in FY2026 compared to 54.0% in FY2025. An effective tax rate eased to 23.3% in FY2026 compared to 24.5% in FY2025. The net profit has increased 2% to Rs 4117.32 crore in FY2026.

Federal Bank: Results
Particulars	2603 (3)	2503 (3)	Var %	2603 (12)	2503 (12)	Var %
Interest Earned	7399.09	6648.36	11	27695.38	26365.25	5
Interest Expended	4226.48	4270.92	-1	17037.97	16897.26	1
Net Interest Income	3172.61	2377.44	33	10657.41	9467.99	13
Other Income	1144.95	1005.95	14	4440.39	3801.25	17
Net Total Income	4317.56	3383.39	28	15097.80	13269.24	14
Operating Expenses	2041.15	1917.99	6	7891.60	7168.11	10
Operating Profits	2276.41	1465.40	55	7206.20	6101.13	18
Provisions & Contingencies	741.04	138.11	437	1836.67	733.06	151
Profit Before Tax	1535.37	1327.29	16	5369.53	5368.07	0
Provision for tax	276.27	297.06	-7	1252.21	1316.18	-5
PAT	1259.10	1030.23	22	4117.32	4051.89	2
EPS*(Rs)	20.4	16.8	?	16.7	16.5	?
Equity	493.0	491.2	?	493.0	491.2	?
Adj BV (Rs)	154.4	131.2	?	154.4	131.2	?
* EPS and Adj BV are calculated on diluted equity as given for each year. Face Value: Rs 2, Figures in Rs crore
Source: Capitaline Corporate Database

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