Federal Bank reported a record net profit of ₹1,386.09 crore for the quarter ended September 30, 2026, marking a 45.10% year-on-year (YoY) increase and the highest quarterly profit in the Bank’s history.
Federal Bank Q2 FY27 performance was supported by strong core earnings, with net interest income (NII) rising 26.38%, fee income increasing 31.86%, and gross and net non-performing assets (NPAs) reaching their lowest levels in a decade.
The Bank’s Federal Bank Q2 FY27 results also showed continued expansion across its business franchise, with total business crossing ₹6.4 lakh crore, gross advances surpassing ₹3 lakh crore and CASA balances rising 22.56% YoY.
Federal Bank Q2 FY27: Key Financial Highlights
For Federal Bank Q2 FY27, net profit stood at ₹1,386.09 crore, registering a 45.10% YoY increase and a 17.77% rise quarter-on-quarter (QoQ). Earnings per share increased 44.34% to ₹22.26, while operating profit grew 35.35% to ₹2,225.37 crore.
The Bank’s core earnings engine remained strong during Federal Bank Q2 FY27, with net interest income increasing 26.38% to ₹3,153.40 crore. NII growth remained ahead of advances growth, which stood at 21.66%.
Net interest margin (NIM) expanded by 26 basis points YoY to 3.32%. Cost of funds declined 40 basis points YoY, while cost of deposits fell 39 basis points YoY to 5.18%.
- Other Income and Fee Income Rise
Federal Bank reported its highest-ever other income at ₹1,490.44 crore in Federal Bank Q2 FY27, representing a 37.73% YoY increase.
Fee income rose 31.86% to ₹1,167.71 crore. Fee income to average earning assets also reached an all-time high of 1.11%.
Federal Bank Q2 FY27 Asset Quality Hits Decadal Best
Asset quality remained a key highlight of Federal Bank Q2 FY27. Gross NPA improved to 1.32%, while net NPA declined to 0.17%, with both metrics reaching their lowest levels in a decade.
Gross NPA improved by 51 basis points YoY, while net NPA improved by 31 basis points YoY.
The Bank’s Provision Coverage Ratio, excluding technical write-offs, strengthened to 86.78%, an improvement of 1,333 basis points YoY. Coverage including technical write-offs stood at 94.49%.
- Credit cost declined 19 basis points YoY to 0.31%.
Total Business Crosses ₹6.4 Lakh Crore
The total business franchise crossed ₹6.4 lakh crore during Federal Bank Q2 FY27, growing 20.12% YoY.
Total deposits stood at ₹3,42,693.56 crore, representing an 18.61% YoY increase. Gross advances crossed the ₹3 lakh crore milestone to reach ₹3,01,687.80 crore, up 21.66% YoY.
CASA Franchise Records Strong Growth
CASA balances reached ₹1,09,803.15 crore during Federal Bank Q2 FY27, increasing 22.56% YoY and growing faster than the overall deposit book.
- The CASA ratio improved 103 basis points YoY to 32.04%, while average CASA crossed ₹1 lakh crore.
Non-resident (NR) deposits, including NRE and ONR deposits, reached ₹1,19,055.98 crore, up 26.63% YoY. FCNR(B) deposits increased 239.14% YoY to ₹23,547.72 crore.
Chosen Segments Continue to Drive Growth
During Federal Bank Q2 FY27, the Bank’s granular and higher-yielding businesses continued to lead growth.
Gold Loans grew 37.13% YoY, while Loans Against Property (LAP) increased 32.21%. Credit Cards grew 28.27%, Commercial Banking rose 25.46%, and CV/CE increased 21.74%.
Corporate & Institutional Banking grew 17.19% YoY to ₹1,04,666.02 crore. Business Banking also returned to growth, increasing 12.39% YoY.
Operating Efficiency Improves
The Cost-to-Income ratio improved by 196 basis points YoY to 52.08% in Federal Bank Q2 FY27.
Return on Assets (RoA) improved 23 basis points YoY to 1.32%, while Return on Equity (RoE) expanded 256 basis points YoY to 13.57%.
- Book value per share increased 17.48% YoY to ₹166.32.
The Bank’s capital position remained strong, with CRAR at 16.84% and Tier I capital at 15.76%, representing YoY increases of 113 basis points and 139 basis points, respectively.
Federal Bank Expands Branch Network
Federal Bank added 12 branches during the quarter, taking its network to 1,662 banking outlets as part of Federal Bank Q2 FY27 business expansion.
Commenting on the performance, KVS Manian, Managing Director & CEO, said: “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.”
He added: “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.”
On the outlook for the second half of the year, Manian said:
“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
Asset quality improved further during Federal Bank Q2 FY27, with gross and net NPA at decadal lows and leading indicators pointing in the same direction.
Fresh slippages declined 27.48% YoY, while the slippage ratio improved to 0.59% from 0.94% a year earlier.
The restructured book declined to ₹1,389.55 crore, equivalent to 0.46% of gross advances.
The Bank said its balanced approach to risk and continued shift towards secured, granular segments provide a meaningful buffer against external uncertainty.
Also Read: Indian Bank Q2 FY27: Net Profit Rises 14.71% YoY to ₹3,462 Crore, Operating Profit Jumps 46.58%
