Federal Bank Q3 profit rises 9 pc to Rs 1,041 cr on non-interest income growth

Mumbai, Jan 16 (PTI) Private sector lender Federal Bank on Friday reported a 9 per cent jump in net profit in the December quarter to Rs 1,041 crore, helped by a growth in non-interest income.

The Kerala-headquartered bank had earned a net profit of Rs 955 crore in the same quarter a year ago.

Its core net interest income rose 9 per cent to Rs 2,653 crore, an all-time high, on the back of a 9 per cent loan growth and a 0.07 per cent expansion in the net interest margin to 3.18 per cent.

Non-interest income grew 20 per cent to Rs 1,100 crore during the reporting quarter, a major factor for the rise in profits.

Its managing director and chief executive, K V S Manian, told reporters that 47 per cent of its loan assets are pegged to the repo rate and added that the impact of RBI's rate cut will play out in the March quarter, which needs to be mitigated to protect the NIMs.

In the December quarter, the bank expanded NIMs on the back of 19 per cent growth in Current and Savings Accounts deposits, which helped the share of low-cost liabilities rise to 32.07 per cent from 30.16 per cent in the year-ago period.

On the asset quality front, the bank's gross non-performing assets ratio improved to 1.72 per cent, as against 1.95 per cent a year ago. The fresh slippages reduced to Rs 435 crore from Rs 579 crore.

Manian said the stress from personal loans and microfinance lending is subsiding, and the bank will be looking to grow the books going forward.

The overall provisions, excluding tax, increased to Rs 332 crore during the quarter from Rs 292 crore a year ago.

The Capital Adequacy Ratio marginally rose to 15.2 per cent from 15.16 per cent at the end of the third quarter of the previous financial year. A bank official said private equity major Blackstone's phase one investment scheduled for this quarter is likely to add 0.50 per cent to the overall buffer, while the rest of the money will come in FY28.

During the quarter, the bank added six branches, in line with its calibrated and market-focused expansion strategy.

Federal Bank 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 at Rs 30.45 per share, it said.

The transaction, completed in November 2025, received all requisite approvals from the RBI and IRDAI, further strengthening the bank's strategic partnership in the life insurance business, it added.

The Federal Bank scrip closed 9.50 per cent up at Rs 270.35 a piece on the BSE, as against gains of 0.23 per cent on the benchmark. PTI AA DRR