Federal Bank shares zoom 11% to new 52-week high after strong third-quarter results

The Federal Bank on Friday reported strong financial performance for the third quarter of FY26, with a net profit of Rs 1,041.21 crore, growing 8.98% year-on-year (year-on-year) and up 9% sequentially (QoQ).The strong increase in operating income was driven by higher core revenues, stable margins and continued operating leverage, as the lender maintained its momentum in key vertical markets.

The bank’s net interest income (NII), a key measure of a bank’s core lending income, stood at Rs 2,652.73 crore, reflecting an increase of 9.11% year-on-year and a growth of 6.31% quarter-on-quarter. This also marked a record high for the bank’s NII. The increase was attributed to robust growth in advances and improvement in financing efficiency.After releasing its third quarter results, shares of Federal Bank rose 11.6% to hit a new 52-week high of Rs 273 on the BSE.

Net interest margin (NIM) for the quarter was 3.18%, up 12 basis points quarter-over-quarter and 7 basis points year-over-year. The improvement in margins was supported by a favorable mix of asset repricing liabilities and benefits, according to the bank.

Further, operating profit rose to Rs 1,729.33 crore, up 10.19% year-on-year and 5.18% quarter-on-quarter, reflecting the strength of core earnings and the bank’s focus on cost control. Commission income also rose significantly, rising 18.57% year-on-year to Rs 896.47 crore, underscoring the bank’s growing non-interest income streams and improving customer engagement.

The bank’s total business (advances + deposits) expanded to Rs 5,53,364.49 crore, registering a growth of 11.40% YoY and 3.71% QoQ. Within this, advances stood at Rs 2,55,568.67 crore, up 10.94% year-on-year and 4.46% quarter-on-quarter. Deposits rose to Rs 2,97,795.82 crore, up 11.80% year-on-year and 3.07% quarter-on-quarter.

The CASA ratio, a key indicator of the low-cost deposit base, stood at 32.07%, improving by 106 basis points sequentially and 191 basis points year-on-year. CASA balances also showed strong growth of 18.86% year-on-year, which helped maintain cost efficiency.

In terms of asset quality, the bank reported a significant improvement, with a gross NPA (GNPA) of 1.72%, down 11 basis points quarter-on-quarter and 23 basis points year-on-year, which is a ten-year low. Net NPA (NNPA) stood at 0.42% and also declined by 6 basis points quarter-on-quarter and 7 basis points year-on-year, due to improved credit monitoring and disciplined underwriting policies. The Provision Coverage Ratio (PCR), excluding technical depreciation, improved to 75.14%, further strengthening the resilience of the bank’s balance sheet.

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In terms of shareholder returns, return on assets (ROA) improved to 1.15%, while return on equity (ROE) for the quarter stood at 11.68%. Earnings per share (EPS) for Q3FY26 was reported at Rs 16.79, up 8.89% QoQ, indicating improved earnings per share potential.

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