Federal Bank reports record Q2 net profit of ₹1,386 crore as bad loans fall

Federal Bank reported a record net profit of ₹1,386.09 crore for the second quarter of FY27, marking a 45.10% increase from the same period last year. The private sector lender released its quarterly financial performance report on October 16, 2026, according to filings and a report by The Hindu.

The increase in earnings was supported by growth in core lending and non-interest income. Net Interest Income grew 26.38% year-on-year to ₹3,153.40 crore. Total interest income increased 15% year-on-year to ₹7,721 crore, while other income rose nearly 38% to reach ₹1,490 crore. Fee income reached a record high of ₹1,167.71 crore, representing a 31.86% year-on-year rise.

The bank recorded lower stress on its loan book during the quarter. The gross non-performing asset ratio dropped to a decade low of 1.32%, down from 1.52% recorded in the preceding quarter. Net non-performing assets dropped to 0.17% from 0.18% in the previous quarter. Fresh bad debt slippages dropped 27.48% compared to the prior year, and the bank's provision coverage ratio reached 86.78%, up 1,333 basis points year-on-year.

The total business franchise of the bank crossed ₹6.4 lakh crore, posting a 20.12% growth year-on-year. Gross advances grew 21.66% year-on-year to hit ₹3,01,687.80 crore. Net advances increased 22% to reach ₹2.49 lakh crore.

Total deposits increased 18.61% year-on-year to ₹3,42,693.56 crore. Current account and savings account balances grew 22.56% year-on-year to ₹1,09,803.15 crore. The current account and savings account ratio stood at 32.04%, an increase of 103 basis points. The bank's net interest margin saw a minor shift, edging down to 3.32% from 3.33% in the prior quarter.

During a post-earnings conference call with media, Managing Director and Chief Executive Officer K. V. S. Manian said the bank was keeping a close watch on its agricultural loan portfolio because of potential weather risks tied to El Niño. He added that the bank had not observed any notable impact on loan slippages in the segment so far.