Business EconomyPosted at: Jan 16 2026 5:35PM


Federal Bank posts strong Q3 FY26 performance with record core earnings

New Delhi, Jan 16 (UNI) Federal Bank reported a strong and balanced performance for the quarter ended December 31, 2025, recording all-time highs in net interest income, operating profit and fee income, supported by margin expansion, lower funding costs and continued improvement in asset quality.
The bank’s net profit rose to Rs 1,041.21 crore in the third quarter of FY26, registering a 9 per cent quarter-on-quarter growth and an 8.98 per cent increase over the same period last year. The improvement in profitability was driven by higher core income and operating leverage.
Net interest income increased to Rs 2,652.73 crore, reflecting a 6.31 per cent sequential growth and a 9.11 per cent rise year-on-year. Net interest margin expanded by 12 basis points on a quarterly basis to 3.18 per cent, aided by a better liability mix, asset repricing and a further reduction in funding costs. The cost of deposits declined to 5.48 per cent, while the overall cost of funds stood at 5.50 per cent.
Operating profit for the quarter rose to ₹1,729.33 crore, marking a 5.18 per cent increase over the previous quarter and a 10.19 per cent growth year-on-year. Fee income stood at Rs 896.47 crore, recording an 18.57 per cent annual growth, strengthening the quality and diversity of the bank’s earnings.
The bank’s total business reached ₹5,53,364.49 crore, growing 3.71 per cent quarter-on-quarter and 11.40 per cent year-on-year. Advances increased to Rs 2,55,568.67 crore, registering a 4.46 per cent sequential growth and a 10.94 per cent rise annually, led by commercial banking and corporate and institutional banking segments. Deposits rose to Rs 2,97,795.82 crore, up 3.07 per cent quarter-on-quarter and 11.80 per cent year-on-year.
The CASA ratio improved to 32.07 per cent, showing an increase of 106 basis points over the previous quarter and 191 basis points year-on-year. CASA balances grew 18.86 per cent on an annual basis, reflecting strengthening of the bank’s liability franchise.
Asset quality improved further during the quarter, with gross non-performing assets declining to 1.72 per cent and net non-performing assets reducing to 0.42 per cent, both at decadal lows. The provision coverage ratio, excluding technical write-offs, improved to 75.14 per cent.
Efficiency indicators also showed improvement, with the cost-to-income ratio declining to 53.92 per cent. Return on assets improved to 1.15 per cent, while return on equity rose to 11.68 per cent. Earnings per share for the quarter stood at Rs 16.79, reflecting an 8.89 per cent quarter-on-quarter increase.
During the quarter, Federal Bank added six branches in line with its calibrated expansion strategy. The bank also increased its stake in Ageas Federal Life Insurance Company from 26 per cent to 30 per cent through the acquisition of 3.2 crore shares in November 2025, following regulatory approvals.
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