Why Did Federal Bank's Q2 Profit Drop Over 9% to Rs 955 Crore?
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Synopsis
Federal Bank reports a notable drop in Q2 profits, but positive trends in total income and deposits signal a resilient performance. CEO KVS Manian emphasizes strategic growth and customer trust, setting a hopeful tone for the future.
Key Takeaways
- Net profit fell by 9.5% YoY to Rs 955.26 crore.
- Quarter-on-quarter profit increased by over 10%.
- Total income rose by 3.5% YoY to Rs 7,824.3 crore.
- Total deposits grew by 7.36% YoY.
- Strategic initiatives are being implemented for future growth.
Mumbai, Oct 18 (NationPress) Federal Bank announced its net profit for the second quarter of the ongoing financial year (Q2 FY26) at Rs 955.26 crore, representing a 9.5% decline year-on-year (YoY). The private lender had reported a net profit of Rs 1,056.6 crore in the same quarter last year (Q2 FY25).
Despite the YoY profit decrease, the bank's earnings rose by over 10% quarter-on-quarter (QoQ) from Rs 861.75 crore in the previous quarter.
In contrast to the profit drop, Federal Bank's total income increased by more than 3.5% YoY to Rs 7,824.3 crore, up from Rs 7,541.23 crore.
The net interest income (NII) for the quarter was Rs 2,495 crore, while the operating profit amounted to Rs 1,644.17 crore.
As per its exchange filing, total deposits rose by 7.36% YoY, while net advances increased by 6.23% YoY.
During the July-September period, total expenditure was recorded at Rs 6,180 crore, reflecting a 3% YoY increase from Rs 5,975.87 crore in the same quarter last year.
The total business of the bank reached Rs 533,576.64 crore, marking a 6.84% YoY growth.
Moreover, net advances grew from Rs 2,30,312.24 crore in Q2 FY25 to Rs 2,44,657.06 crore as of September 30, representing an increase of over 6.23% YoY.
The bank also reported that total deposits climbed 7.3% from Rs 269,106.59 crore in the same quarter last year to Rs 288,919.58 crore at the end of this quarter.
KVS Manian, Managing Director and CEO of Federal Bank, stated, "Having spent over a year in this role, I have a deep conviction about the current standing of the bank and our future direction. We've undertaken several strategic realignments to reinforce our foundation, and the outcomes are becoming evident." He added, "Our CASA franchise continues to show sustained growth, reflecting our customers' trust and our team's consistent execution. We are thoughtfully broadening our asset mix, increasing our mid-yield portfolio in a disciplined manner."
Point of View
It is crucial to present an unbiased view of Federal Bank's financial performance. While the decline in net profit raises concerns, the increase in total income and deposits reflects a potentially robust operational foundation. Stakeholders must consider both the challenges and opportunities as the bank navigates this period.
NationPress
18/10/2025
Frequently Asked Questions
What factors contributed to the decline in Federal Bank's Q2 profit?
The decline in profit can be attributed to various operational challenges and market conditions, though total income and deposits showed positive growth.
How did Federal Bank's net interest income perform in Q2 FY26?
In Q2 FY26, Federal Bank's net interest income stood at Rs 2,495 crore.
What is the outlook for Federal Bank following this financial report?
Despite the profit decline, the bank's leadership remains optimistic about future growth due to strategic initiatives and customer trust.
