Federal Bank Q1 Results: Profit Rises 37%, Net Interest Income Up 26%

Federal Bank reported a strong financial performance for the first quarter of the financial year 2026-27, with net profit increasing 36.6 percent year-on-year to Rs 1,177 crore. The private sector lender attributed the growth to strong expansion in net interest income (NII), improved asset quality, and lower provisions during the quarter ended June 2026. The bank's results reflected steady business growth despite a moderation in some profitability indicators.

The bank's net interest income rose 26.1 percent year-on-year to Rs 2,946 crore, compared with Rs 2,337 crore recorded during the same period a year earlier. Federal Bank also reported healthy loan growth of 15 percent year-on-year and 5 percent sequentially, indicating continued expansion in its lending operations. The increase in core income was a key factor supporting the rise in overall profitability during the quarter.

Asset quality showed further improvement during the period, with gross non-performing assets (GNPA) declining to 1.52 percent from 1.62 percent in the previous quarter. Net non-performing assets (NNPA) also improved to 0.18 percent from 0.20 percent sequentially. The reduction in bad loans highlighted better credit performance and improved recovery trends across the bank's loan portfolio.

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The bank's provisions declined significantly during the quarter, falling to Rs 317 crore from Rs 741 crore in the previous quarter and Rs 400 crore in the same period last year. Fresh loan slippages also eased to Rs 409 crore, compared with Rs 474 crore in the fourth quarter of the previous financial year. These lower provisioning requirements contributed to the improvement in the lender's bottom line.

However, Federal Bank's net interest margin (NIM) moderated to 3.33 percent from 3.74 percent in the preceding quarter. The bank also reported a rise in tax expenses, which increased to Rs 402.7 crore from Rs 294.4 crore in the year-ago period. Despite these factors, the lender maintained strong momentum during the quarter, supported by higher interest income, controlled asset quality risks, and continued growth in its loan book.

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