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Federal Bank Q1 profit rises 36.5% as NPA levels improve
Net profit increased to ₹1,177 crore, helped by 26% growth in net interest income and a cost-of-funds decline that supported an expanded net interest margin.
Federal Bank reported Q1 FY27 results for the June quarter ended 17 July, with net profit rising 36.5% year-on-year to ₹1,177 crore. The lender said earnings were driven by higher net interest income and improving asset quality.
Net interest income increased 26% to ₹2,946 crore, while net interest margin expanded 39 basis points year-on-year to 3.33%. The bank attributed the margin improvement to a 60-basis-point decline in the cost of funds that more than offset a 44-basis-point compression in asset yields, with deposit costs easing 57 basis points year-on-year to 5.21%.
Asset quality strengthened, with gross non-performing assets improving to 1.52% from 1.62% in the prior quarter and net NPAs declining to 0.18% from 0.20%. In absolute terms, net NPAs fell 56.3% year-on-year to ₹506.04 crore, fresh slippages dropped 37.8% to ₹409.48 crore, and the slippage ratio improved to 0.61% from 1.11% a year earlier.
The bank also reported a sharp decline in provisions to ₹317.7 crore, down from ₹741 crore in the March quarter, while its provision coverage ratio excluding technical write-offs rose to 87.37%. Federal Bank said CASA balances increased 18.26% year-on-year to ₹1.03 lakh crore and that its restructured loan book fell to ₹1,541.3 crore, or 0.55% of gross advances. LiveMint Markets quoted KVS Manian, managing director and CEO, saying the quarter reflected the strength of the bank’s core franchise.