The Federal Bank (FEDERALBNK) Q2 25/26 earnings summary

Executive summary

• Achieved highest ever net interest and fee income in Q2 FY26, with strong operating fundamentals and steady execution despite macro challenges.

• Structural improvements in income and balance sheet are driving performance, with a focus on strengthening NIMs through CASA growth and asset mix optimization.

• Board approved unaudited consolidated and standalone financial results for the quarter and half year ended September 30, 2025, with limited review and unmodified auditor reports issued.

• CASA ratio scaled to 31.01%, reflecting healthy deposit mobilization and franchise strength.

• Balance sheet reached ₹3,56,080 Cr, with robust capital adequacy (CRAR 15.71%) and improved asset quality (GNPA at 1.83%).

Financial highlights

• NIM improved from 2.94% to 3.06% quarter-over-quarter, mainly due to lower deposit and borrowing costs.

• Net interest income grew 7% QoQ and 5% YoY to ₹2,495 Cr; fee income rose 13% QoQ and YoY to ₹886 Cr.

• Standalone net profit for Q2 FY26: ₹95,526 lakhs, up from ₹86,175 lakhs in Q1 FY26; consolidated net profit: ₹99,194 lakhs.

• Operating profit increased 6% QoQ and 5% YoY to ₹1,644 Cr; net profit up 11% QoQ to ₹955 Cr, but down 10% YoY.

• Total deposits grew 7% YoY to ₹2,88,920 Cr; advances up 5% YoY to ₹2,55,613 Cr.

Outlook and guidance

• NIMs expected to improve further, with ongoing deposit repricing and continued CASA momentum.

• Focus remains on profitable growth, digital transformation, and maintaining asset quality.

• Full-year credit cost guidance maintained at 55 bps, with efforts to come below that if MFI stress eases.

• Continued investment in digital channels and partnerships to drive efficiency and customer acquisition.