The Federal Bank (FEDERALBNK) Q2 25/26 earnings summary

Executive summary

• Structural improvements in income and balance sheet, with highest ever net interest and fee income in Q2 FY26 and strong operating fundamentals despite macro challenges.

• CASA ratio improved by over 120 bps YoY and over 100 bps QoQ, reaching 31.01%, with strong current account and NRI franchise growth.

• Remittance market share increased to 21%, and digital innovations such as FedOne and interoperable banking platforms are driving higher engagement.

• Deliberate rationalization of wholesale and financial sector deposits to improve deposit quality, with CASA and retail term deposits growing over 11% YoY.

• Board approved unaudited consolidated and standalone financial results for the quarter and half year ended September 30, 2025, with unmodified auditor reports.

Financial highlights

• NIM improved to 3.06% from 2.94% QoQ, driven by a 19 bps reduction in deposit cost and CASA growth.

• Net interest income grew 7% QoQ and 5% YoY to ₹2,495 Cr; fee income rose 13% QoQ and YoY to ₹886 Cr.

• Standalone net profit for Q2 FY26: ₹95,526 lakhs, up from ₹86,175 lakhs in Q1 FY26; consolidated net profit: ₹99,194 lakhs.

• Operating profit increased 6% QoQ and 5% YoY to ₹1,644 Cr; net profit up 11% QoQ to ₹955 Cr.

• LCR for the quarter is 129%; CET1/CRAR at 15.71%.

Outlook and guidance

• NIMs expected to improve further, supported by deposit repricing and CASA initiatives, barring significant rate cuts.

• Focus remains on profitable growth, digital transformation, and maintaining asset quality.

• Full-year credit cost guidance maintained at 55 bps, with efforts to come below that if MFI stress continues to ease.

• Continued investment in digital channels and partnerships to drive efficiency and customer acquisition.