Federal Bank shares surge most in over six years after reporting strong December quarter earnings

Federal Bank shares posted their biggest single day in over six years after it reported strong set of earnings in December quarter on Friday, January 16. On the BSE, Federal Bank shares rose as much as 9.2%, its biggest gain since January 1, 2020 to hit an intraday high of ₹269.55, data from the stock exchange showed. On the National Stock Exchange, Federal Bank shares climbed as much as 9.24% to hit an intraday high of ₹269.65.

Federal Bank reported net profit of ₹1,041 crore in the third quarter of current financial year (Q3FY26), marking an upside of 9% from ₹955 crore in the same period last year.

Its net interest income or the difference between interest earned on loans and expended on deposits advanced 9.1% to ₹2,653 crore as against ₹2,431 crore in the year-ago period.

Federal Bank's net interest margin (NIM) expanded 12 bps QoQ to 3.18%, supported by liability mix improvement and asset repricing, the bank said in a press release.

The Kerala-based lender's asset quality improved during the quarter as its gross non-performing assets (NPAs), as a percentage of total advances, eased to 1.72% from 1.95% in the year-ago period and 1.83% in the previous quarter. In absolute terms gross NPAs were ₹4,447 crore.

Its net NPAs came in at 0.42% compared with 0.49% n the year-ago period.

“Our Q3 performance reflects the continued strengthening of the Bank’s underlying fundamentals. The improvement in margins, reduction in 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," said KVS Manian, Managing Director & CEO of Federal Bank.

"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. At the same time, cost discipline and prudent risk management remain central to how we operate. While competitive intensity remains high, our emphasis is on consistency and quality of earnings rather than headline growth. We believe this approach positions the Bank well to deliver sustainable performance across market cycles,” Manian added.

As of 12:34 pm, Federal Bank shares traded 8.59% higher at ₹267.80, outperforming the NIFTY Bank index which was up 0.74%. The stock was also the top gainer in the NIFTY Bank index.