Federal Bank Q1 FY27 Results (NSE: FEDERALBNK)
Signal: Earnings grew
The read
Federal Bank delivered its highest-ever quarterly PAT of ₹1,176.93 Cr (+36.6% YoY), driven entirely by core earnings — NII grew 26.1% (well above advances growth of 14.9%) on NIM expansion of 39 bps to 3.33%, while fee income rose 21.7%. Asset quality reached a decadal best with NNPA at 0.18% and fresh slippages down 37.8%; the provisioning buffer strengthened to 87.37% coverage. Cost-to-income improved 239 bps to 52.5% even after absorbing annual wage revision, and RoA expanded 22 bps to 1.22%. The bank enters FY27 with strong core momentum, a structurally improved liability franchise (CASA +18.3%, NR deposits +14.2%), and capital position described as strong.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹3,313.76 Cr | +25.6% | N/A |
| EBIT | ₹616.29 Cr | +64.4% | |
| Net profit | ₹409.36 Cr | +36.6% | N/A |
| EPS | ₹19.15 | +36.0% |
P&L walk
Total income rose 25.6% YoY to ₹33,137.56 mn, driven by strong NII growth; operating profit (pre-provision) surged 64.4% due to expense growth (+19.1%) trailing revenue growth, particularly in employee costs (+13.9%) and other expenses (+21.6%); PAT growth of 36.6% was aided by higher pre-provision profit partly offset by higher tax (+63.1%); core earnings quality is high with treasury income subdued
Segments
Single operating segment; no segment-level split beyond the consolidated banking operations.
Key positives
- NII grew 26.1% YoY, well ahead of advances growth of 14.9%, demonstrating margin expansion (NIM +39 bps to 3.33%)
- Net profit at ₹1,176.93 Cr (+36.6% YoY) was a record quarterly profit on an underlying basis with no treasury windfall
- Asset quality at decadal best: NNPA 0.18% (down 56.3% YoY), GNPA 1.52%, fresh slippages down 37.8% YoY
- Provision coverage ratio strengthened to 87.37% (+1,296 bps YoY), credit cost declined 24 bps to 0.41%
- CASA grew 18.3% YoY, significantly faster than total deposits (+11.4%), improving CASA ratio by 188 bps to 32.23%
- Cost-to-income ratio improved 239 bps YoY to 52.5% even after absorbing annual wage revision
- RoA expanded 22 bps to 1.22% and RoE expanded 171 bps to 12.01%; book value per share +17.0% to ₹161.87
Key concerns
- Tax expense jumped 63.1% YoY, partly offsetting the strong pre-provision profit growth
- Total income growth of 25.6% was boosted by other income; treasury income was subdued but other income still grew 21.9% — sustainability of non-interest income mix needs watching
Research and educational content only. Not investment advice.