Federal Bank Posts Record Q3 FY26 Performance as Margins Improve and Asset Quality Strengthens

Federal Bank Posts Record Q3 FY26 Performance as Margins Improve and Asset Quality Strengthens

Federal Bank Delivers Record Q3 FY26 Performance with All-Time High NII, Operating Profit and Fee Income; Margins Expand and Asset Quality Strengthens Further

Federal Bank reported a strong and well-rounded performance for the quarter ended December 31, 2025 (Q3 FY26), marked by sustained margin expansion, improving profitability, disciplined cost management, and a further strengthening of asset quality. The results underscore the Bank’s continued focus on building a stable, margin-led, and resilient franchise.

Key Financial Highlights Q3 FY26

• Net profit recorded healthy sequential and year-on-year growth, supported by stronger core income and operating leverage.

• Net Interest Income reached an all-time high, reflecting steady balance-sheet expansion and improved yield dynamics.

• Net Interest Margin expanded quarter-on-quarter, driven by an improved liability mix and timely asset repricing.

• Operating profit posted solid growth on both a quarterly and annual basis, supported by disciplined cost management.

• Fee income achieved a record level, registering strong year-on-year growth and enhancing the quality and diversification of earnings.

• Total business continued its upward trajectory, delivering steady growth across both advances and deposits.

• Advances growth was led by Commercial Banking and Corporate & Institutional Banking segments.

• Deposits grew consistently, supported by a strengthening liability franchise.

• CASA ratio improved meaningfully on both a quarterly and annual basis, with strong growth in CASA balances.

• Cost-to-income ratio improved further, reflecting operating leverage and efficiency gains.

• Asset quality strengthened to decadal lows, with continued reduction in both gross and net NPAs.

• Provision coverage improved, reinforcing balance-sheet resilience.

• Return on Assets and Return on Equity showed sequential improvement, reflecting enhanced profitability.

• Earnings per share recorded healthy quarter-on-quarter growth.

Management Commentary

Commenting on the performance, Mr. KVS Manian, Managing Director & CEO, Federal Bank, said:

“Our Q3 performance reflects the continued strengthening of the Bank’s underlying fundamentals. Improvements in margins, declining funding costs, and sustained stability in asset quality are the direct outcome of the balance-sheet discipline and execution focus we have maintained over the past few quarters.

We are seeing increasing benefits from a stronger liability franchise and a calibrated shift in our asset mix toward segments that deliver superior risk-adjusted returns. While competitive intensity remains high, our emphasis remains on consistency and quality of earnings rather than headline growth. This approach positions the Bank well to deliver sustainable performance across market cycles.”

Strategic and Business Updates

Branch Expansion:
During the quarter, the Bank added six branches, aligned with its calibrated and market-focused expansion strategy.

Stake Increase in Ageas Federal Life Insurance:
Federal Bank increased its stake in Ageas Federal Life Insurance Company, strengthening its strategic partnership in the life insurance business. The transaction was completed during the quarter after receiving all requisite regulatory approvals.

Brand Refresh – The Fortuna Wave:
The Bank unveiled The Fortuna Wave, a refreshed brand identity reflecting its evolution into a contemporary and future-ready institution. Rooted in authenticity, prosperity, and togetherness, the new identity sharpens Federal Bank’s connection with a digitally driven customer base.

Strategic Investment by Blackstone:
Federal Bank welcomed a strategic minority investment from Blackstone, marking a significant milestone in its growth journey. The investment, which received approvals from the Board of Directors, shareholders, and regulatory authorities, underscores strong confidence in the Bank’s strategy, governance, and long-term growth potential.

With strong core earnings momentum, improving asset quality, and a strengthened balance sheet, Federal Bank remains well positioned to deliver consistent and sustainable performance in the coming quarters.