Federal Bank reported a robust and structurally strong performance for the quarter ended 31 March 2026 (Q4 FY26). This was a strong operational quarter, moving firmly in line with the strategic direction of the Bank. The period was characterized by margin expansion, a surge in fee income, and asset quality reaching new historical benchmarks.
Key Highlights – Q4 FY26
Profitability: Net profit stood at ₹1,259.10 crore for the quarter, a sequential growth of 20.93% and, supported by stronger core earnings. The net profit for the financial year stands at ₹4,117.32 crore.
Liability Restructuring: The Bank successfully optimized its funding profile by focusing on retail liabilities and deliberately reducing the volume of high-value deposits to lower the overall Cost of Funds (5.46%).
NR Franchise Milestone: Further strengthening its core moats, the NR deposit book crossed the ₹1 lakh crore milestone, reaching ₹1,02,619.69 crore (up 7.04% QoQ).
CASA Momentum: The CASA ratio improved to 32.94%, up 271 bps YoY.
Asset Mix & Growth: The structural shift in the asset mix is yielding results, with strong growth in desired segments like Commercial Banking (+5.92% QoQ) and Retail Banking (+3.21% QoQ).
Fee Income: The “Fee Story” remains a standout, with fee income reaching ₹990.92 crore, up 10.54% QoQ.
Asset Quality: GNPA and NNPA reached record lows of 1.62% and 0.20% respectively.
Return Metrics: RoA reached 1.36% and NIM reached 3.74%, while RoE expanded to 13.69%.
Wealth Management: The Bank successfully launched its wealth offering during the quarter, marking a new chapter in its service offerings.
Total Business reached ₹5,78,503.76 crore, registering 4.54% QoQ growth.
Gross Advances rose to ₹2,68,369.03 crore, up 3.65% QoQ, led by Commercial Banking, Retail, and the CV/CE segments.
Total Deposits rose to ₹3,13,909.39 crore, up 5.41% QoQ, led by Resident and NR book.
CASA balances grew to ₹1,03,390.30 crore, up 8.26% QoQ, crossing the ₹1 lakh crore milestone.
Operating Efficiency: Cost-to-Income ratio improved to 47.28%, a sequential reduction of 665 bps, reflecting strong operating leverage.
Provision Coverage Ratio (excluding TWO) improved to 87.07%, up 1,193 bps sequentially.
MD & CEO’s Comment
Commenting on the performance, Mr. KVS Manian, Managing Director & CEO, said:
“Our Q4 performance represents a strong operational quarter that is fully aligned with our strategic roadmap. We have made significant progress in restructuring our liabilities by focusing on retail mobilization and reducing reliance on high-value deposits, which is reflected in our optimized cost of funds. Reaching the ₹1 lakh crore milestone in both CASA and NR deposits concurrently is a structural achievement that reinforces our funding moat.
While shifting the asset mix is a medium-term journey, we are seeing the desired growth in our chosen segments. With our new in-house Wealth Platform now live and our RoA and NIMs returning to pre-rate cut levels, we are well-positioned for the next phase of our growth.”
Strategic Network Expansion
The Bank added 39 new branches during the quarter. This expansion and restructuring process has been elevated through a highly data driven approach, leveraging detailed studies by external experts. These insights are helping the Bank build a solid, data-driven branch network designed for maximum impact and efficiency.
Asset Quality and Resilience
Despite global geopolitical uncertainties, the Bank’s inherently balanced risk approach ensured that Gross NPA and Net NPA remained at decadal lows. The pivot towards selected segments continues to provide a meaningful buffer, positioning the Bank with greater resilience.