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Federal Bank on Saturday reported a 9.5 per cent year-on-year (YoY) decline in its net profit for the July–September quarter of 2025–26 (Q2 FY26) to Rs 955 crore, even as its total income and deposits grew steadily. The lender said the dip in profit was due to higher expenses, though sequential performance improved on the back of stronger income growth.

The private sector lender had posted a net profit of Rs 1,056.6 crore in the same quarter a year ago. However, compared with the previous quarter, the bank’s profit rose more than 10 per cent from Rs 861.75 crore, indicating sequential improvement.

Total income rose 3.5 per cent YoY to Rs 7,824.3 crore from Rs 7,541.23 crore in Q2 FY25. Net interest income stood at Rs 2,495 crore, while operating profit came in at Rs 1,644.17 crore.

According to the bank’s exchange filing, total expenditure for the quarter increased to Rs 6,180 crore from Rs 5,975.87 crore a year ago, up 3 per cent YoY.

Federal Bank’s total deposits rose 7.3 per cent to Rs 2,88,919.58 crore as of September 30, compared with Rs 2,69,106.59 crore a year earlier. Net advances grew 6.23 per cent to Rs 2,44,657.06 crore, supported by sustained retail and SME lending.

The bank’s total business touched Rs 5,33,576.64 crore at the end of the quarter, reflecting a 6.84 per cent annual growth.

Managing Director and Chief Executive Officer KVS Manian said the bank’s performance reflects the progress of its strategic realignment efforts.

"Having spent over a year in this role, I have a deep sense of conviction about where the Bank stands today and the direction we're headed. Over the past few quarters, we've undertaken several strategic reorientations to strengthen our foundation and build for the future and the results are beginning to show, Manian said.

He added that the bank’s CASA (current account and savings account) franchise continues to grow meaningfully, supported by customer trust and consistent execution. “We’re also broadening our asset mix thoughtfully, increasing the share of our mid-yield portfolio in a measured and disciplined way,” he noted.

Ankit Kumar is a Senior Sub Editor at Zee Business. He covers international affairs, politics, climate change, business, finance and global elections. With experience acros