Federal Bank Posts Record Profit as NPAs Hit Decade Low

Federal Bank shares closed 0.90% higher at Rs 338 on Friday, after touching an intraday high of Rs 344.80, as the private lender reported a record September quarter profit of Rs 1,386 crore, up 45% year on year, alongside decade-low bad loans. Net profit rose 45.1% from Rs 955 crore, while net interest income grew 26.4% to Rs 3,153 crore and net interest margin improved 26 basis points to 3.32%. Fee income rose about 32% to Rs 1,168 crore, helping other income reach a record Rs 1,490 crore. Asset quality was the highlight: gross NPA fell to 1.32% and net NPA to 0.17%, both at decadal lows, with the slippage ratio at 0.59% against 0.94% a year earlier. Gross advances grew 21.7% to Rs 3.02 lakh crore and deposits 18.6% to Rs 3.43 lakh crore, with the CASA ratio at 32.04%. Faster profit growth than loan growth, with margins improving and cost of deposits falling 39 basis points to 5.18%, suggests the bank is gaining on both growth and profitability. Strong CASA balances, up 22.6%, support funding costs, while falling slippages reduce the risk of future credit losses. Investors will look for whether margins and fee income can hold at these levels as loan growth stays above 20%. The stock has ranged between Rs 211.52 and Rs 371.70 over the past 52 weeks, with a market cap of around Rs 83,580 crore. Monday’s trading will show how the market prices the record profit and clean asset quality against a stock that has already rallied from its yearly low. Disclosure: Palash Kag, Proprietor, Sarathi Research (SEBI Reg. No. INH000012740). No position held in Federal Bank. This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy, sell, or hold any security. Please consult a registered advisor before making investment decisions.