Federal Bank Q1 net profit soars 37% YoY to ₹1,177 crore, asset quality improves; shares at 52-week high

Shares of Federal Bank also surged to hit a 52-week high during the trading session on Friday, following the result announcement.

The bank noted that the quarter was defined by the strength of its core franchise, with net interest income growing 26.06% and fee income 21.71%, even as treasury income remained subdued through a volatile market period.

The Bank reported a 36.57% year-on-year (YoY) surge in its standalone net profit to ₹1,176.93 crore during the quarter under review, compared with ₹861.75 crore in the first quarter of the 2025-26 fiscal year (Q1 FY26), according to a regulatory filing.

However, on a sequential basis, its profit declined by 6.53% quarter-on-quarter (QoQ) from ₹1,259.10 crore in the March quarter of FY26 (Q4 FY26).

“All sequential comparisons in this release are stated on a BAU (Business as Usual) basis, excluding the one-off windfall gain recorded in Q4 FY26, consistent with the BAU disclosure in the Bank's investor presentation. Year-on-year comparisons are like-for-like and unaffected,” it said in its press release.

Its net interest income (NII) advanced 26% YoY to ₹2,946 crore in Q1 FY27, in comparison to ₹2,337 crore in the same period of the previous fiscal year. It fell 7% QoQ from ₹3,173 crore in Q4 FY26.

Margin expansion

Its net interest margin (NIM) expanded by 39 basis points (bps) YoY to 3.33% during the quarter, from 2.94% in the corresponding period of FY26, as its Cost of Funds fell 60 bps against a 44 bps compression in asset yield. Furthermore, the Cost of Deposits declined 57 bps YoY to 5.21%.

Federal Bank’s asset quality improves

The Bank’s asset quality improved, as its gross non-performing assets (GNPA) contracted to 1.52% in the first quarter of FY27, as against 1.91% in the year-ago period and 1.62% in the preceding quarter.

Its net non-performing assets (NNPA) also declined both YoY and sequentially, falling to 0.18% for the reporting quarter, from 0.48% in the June FY26 quarter and 0.20% in Q4 FY26.

Its GNPA and NNPA for the quarter were at their decadal best, the bank said in its investor presentation.

“Asset quality reached the strongest position in the Bank's recent history. Beyond the headline ratios, the leading indicators point in the same direction: fresh slippages declined 37.79% YoY, and the slippage ratio improved to 0.61% from 1.11% a year ago,” it stated.

The restructured book reduced to ₹1,541.30 crore, or 0.55% of gross advances, it said, adding that the Bank's “balanced risk approach” and the “deliberate pivot toward secured, granular segments” have continued to provide a “meaningful buffer against external uncertainty”.

Other key highlights

Federal Bank’s total business reached ₹5.98 lakh crore, up 13.05% YoY, approaching the ₹6 lakh crore mark.

Its total deposits stood at ₹3.20 lakh crore, reflecting an 11.37% YoY increase. Furthermore, its gross advances advanced by 14.94% YoY to ₹2.81 lakh crore.

The bank’s Current Account Savings Account (CASA) balances grew 18.26% YoY to ₹1.03 lakh crore in Q1 FY27. It grew significantly faster than the overall deposit book, with the CASA ratio improving by 188 bps YoY to 32.23%.

Its Non-Resident (NR) deposits, which include Non-Resident External (NRE) and Ordinary Non-Resident (ONR) deposits, reached ₹1.05 lakh crore, up 14.24% YoY.

During the quarter, Federal Bank added 10 branches, taking its network to 1,650 outlets.

What the CEO said

Commenting on the earnings, KVS Manian, Managing Director & CEO of Federal Bank. said: “This quarter demonstrates something important about the franchise we have been building. Our profit grew nearly 37% in a period when the treasury had a challenging period, which tells you that the earnings are coming from the core business, not from market gains.”

He further stated that the NII growing 26% against advances growth of 15% represented the expansion in its NIMs, which he added has been a core focus for the bank.

“Our net NPA at 0.18% is the lowest in the Bank's recent history, and simultaneously and provision coverage ratio stands at 87%. We are building a resilient balance sheet through a combination of lower credit cost and a strong buffer out of our current earnings,” Manian said.

The bank’s chosen advance segments have been delivering as intended, and the NR and CASA franchises have continued to deepen.

“We enter the rest of the year with our capital position strong, our asset quality at its decadal best, and good momentum in our core business,” Manian added.

Federal Bank stock performance

Shares of Federal Bank rallied as much as 7.47% to hit a 52-week high of ₹351 per unit on the National Stock Exchange (NSE) on Friday, July 17, as its Q1 earnings impressed investors.

At around 2:32 PM, the scrip was trading 7.10% higher at ₹349.80 per equity share. It touched a year’s low of ₹185.11 apiece on August 4, 2025.

The stock has jumped more than 5% in the past week and 8% over the month. On a year-to-date (YTD) basis, it has gained 31%.

Federal Bank has a total market capitalisation of ₹86,446.60 crore as of July 17, 2026, according to data on the NSE.