Federal Bank reported a 37% year-on-year jump in profit to ₹1,180 crore for the first quarter of fiscal 2027. The performance was supported by a 26% growth in net interest income. Investors may track the bank's ability to improve its CASA deposit mix, which remained flat during the quarter.
Federal Bank has reported its financial results for the first quarter ending June 30, 2026, showcasing a 37% increase in Profit After Tax (PAT) to ₹1,180 crore compared to the same period last year. While this growth highlights a strong year-on-year performance, the figure represents a 7% decline when compared to the previous quarter. The bank's core income from lending, measured as Net Interest Income (NII), reached ₹2,950 crore, growing 26% over the previous year.
Net Interest Margins and Lending Performance
A key driver for the bank's income this quarter was the improvement in its Adjusted Net Interest Margins (NIMs), which rose by 13 basis points sequentially to reach 3.33%. This margin expansion suggests the bank was able to manage its cost of funds effectively while maintaining lending rates. In terms of business volume, the bank's total advances grew by 15% year-on-year. Growth in the loan book was primarily driven by the bank's focus on the SME, gold, and corporate lending segments.
Deposit Growth and CASA Mix
While the bank saw a 11% year-on-year increase in total deposits, the composition of these deposits remains an area for investors to monitor. The Current Account Savings Account (CASA) ratio, which represents the bank's low-cost deposit base, remained flat sequentially. As a result, the CASA mix declined by 71 basis points to 32.2%. A lower CASA ratio can put pressure on a bank's cost of funds, as it may force the institution to rely on more expensive term deposits to fund its loan growth.
Future Projections and Financial Outlook
Following these results, the bank's outlook for fiscal year 2027 reflects expectations of steady returns. Projections for the bank indicate a Return on Assets (RoA) of 1.25% and a Return on Equity (RoE) of 12.1% for FY27. As the bank continues to expand its loan book, its ability to maintain these margin levels while simultaneously improving the CASA deposit mix will be crucial. Investors should also track the bank's provisioning levels and asset quality metrics in upcoming quarters to ensure that the loan growth does not come at the expense of higher credit costs.