Federal Bank reported an 8.98% rise in fiscal third-quarter net profit to Rs 1,041 crore from Rs 955 crore a year ago, led by margin expansion, asset quality improvement and fee income growth.

The private sector bank’s net interest margin (NIM) widened to 3.18% in the December 2025 quarter, from 3.06% on quarter and 3.11% a year ago. The expansion was supported by lower funding costs, strong CASA (current account savings account) accretion and continued shift towards mid-yield segments. 

The lender’s asset quality for the December 2025 quarter hit the decadal best, with gross non-performing assets (NPA) at 1.72% and net NPA at 0.42%. In the year-ago period, gross NPA was at 1.95% and net NPA at 0.49%.

Deposits rose 11.8% to Rs 2.98 lakh crore as on 31 December 2025 compared to Rs 2.66 lakh crore a year ago. The CASA ratio improved to 32.07% from 30.16% in the earlier year.

Credit cost moderated to 0.47% from 0.58% a year ago, as microfinance stress continued to ease.

Fee income increased 19% to Rs 896 crore in the December quarter from Rs 756 crore a year ago. 

The bank’s advances grew 10.9% on year and 4.5% on quarter to Rs 2.56 lakh crore, led by commercial banking, business banking and gold loans.  

The bank reiterated its guidance of 14–16% loan growth for FY26-27, with momentum expected to pick up led by retail, gold loans and mid-corporate segments, alongside continued improvement in margins as deposit repricing benefits flow through.