Federal Bank Q1 Results: Federal Bank reported its June quarter (Q1 FY27) results on Friday, 17 July, with net profit rising 36.5% year-on-year to ₹1,177 crore, driven by robust growth in net interest income and an improvement in asset quality.
The private sector lender’s net interest income (NII) increased 26% to ₹2,946 crore from ₹2,336 crore a year ago.
Asset quality strengthened sequentially, with gross non-performing assets (GNPA) improving to 1.52% from 1.62% in the previous quarter, while net NPA (NNPA) declined to 0.18% from 0.20%.
The bank also reported a sharp decline in provisions, which stood at ₹317.7 crore, compared with ₹741 crore in the March quarter and ₹400 crore in the corresponding period last year.
The bank said its net interest margin (NIM) expanded 39 basis points year-on-year to 3.33%, supported by a 60-basis-point decline in the cost of funds, which more than offset a 44-basis-point compression in asset yields. The cost of deposits also eased 57 basis points year-on-year to 5.21%.
NPAs
Federal Bank said its asset quality improved to its strongest level in recent history, with net NPA falling to a decadal low of 0.18%. In absolute terms, net NPAs declined 56.3% year-on-year to ₹506.04 crore, while gross NPA improved to 1.52%. Fresh slippages dropped 37.8% year-on-year to ₹409.48 crore, with the slippage ratio improving to 0.61% from 1.11% a year earlier.
The bank further said its Provision Coverage Ratio (PCR), excluding technical write-offs, strengthened to 87.37%, up 1,296 basis points from a year ago, while credit cost declined 24 basis points to 0.41%. Including technical write-offs, the coverage ratio stood at 94.23%.
CASA ratio
On the liability side, CASA balances increased 18.26% year-on-year to ₹1.03 lakh crore, outpacing overall deposit growth. As a result, the CASA ratio improved by 188 basis points to 32.23%.
The bank also highlighted that its restructured loan book reduced to ₹1,541.3 crore, or 0.55% of gross advances. It attributed the improvement in asset quality to its balanced risk management strategy and an increased focus on secured and granular lending segments, which it said provide resilience against external uncertainties.
KVS Manian, Managing Director & CEO of Federal Bank, said the bank’s strong first-quarter performance underscores the strength of its core franchise, with earnings being driven by its lending business rather than treasury gains.
“Our profit grew nearly 37% despite a challenging quarter for treasury operations, which shows that our earnings are being driven by the core business and not by market-related gains,” Manian said. He added that net interest income (NII) growth of 26%, compared with 15% growth in advances, reflects the bank’s continued focus on expanding its net interest margins (NIMs).
Commenting on asset quality, Manian said the bank’s net NPA declined to 0.18%, the lowest level in its recent history, while the provision coverage ratio (PCR) stood at 87%. “We are building a resilient balance sheet through lower credit costs and maintaining a strong provisioning buffer from our current earnings,” he said.
He further noted that the bank’s strategy of focusing on selected lending segments is delivering the desired results, while its NRI and CASA franchises continue to strengthen. “We enter the rest of the year with a strong capital position, asset quality at its best level in a decade, and healthy momentum in our core business,” Manian added.
Federal Bank share price today
Federal Bank share price today jumped over 6% after the Q1 results, the stock was trading at ₹348 apiece on the BSE.
Hitesh Rathi, Technical Analyst – Equity & Derivatives at Angel One, said the technical structure of Federal Bank remains firmly bullish across multiple timeframes, with no signs of a meaningful trend reversal.
According to Rathi, the stock continues to trade in a column of X across all major Point & Figure chart box sizes and remains comfortably above its key moving averages, indicating that the primary uptrend is intact.
However, he cautioned that after the sharp rally over the past few months, the stock could face resistance around ₹350. Rathi noted that this zone coincides with the stock’s open vertical count on the Point & Figure chart and also represents an important psychological resistance level.
“While the broader trend remains constructive, some consolidation or profit booking around the ₹350 mark cannot be ruled out before the stock attempts its next leg higher,” he said.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
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