Mumbai, Federal Bank’s net profit fell 15 percent to Rs 862 crore in the June quarter, as the core income was affected by the reduction in poverty and the rise in unemployment due to the rise in unemployment.
The bank management said that the increase in loan growth and net interest rate in the second quarter of the financial year should also be emphasized. They attributed the industry-non-partners to the portfolio of microfinance in the performing societies.
In the quarter under review, its core net interest income grew only 2 percent to Rs 2,337 crore. Other income rose 22 percent to an all-time high of Rs 1,113 crore, which is also due to the increase in core charges and fiscal income.
The private sector lender reported a 9 percent loan growth, but core income growth was the biggest hit as net profit (NIM) fell to 2.94 percent from 3.16 percent in the same quarter a year ago.
Its managing director and chief executive officer KVS Manian said net profit (NIM) will reach its normal level in the September quarter and then move up by 3 percent due to revaluation of deposits. He further said that with further growth across the globe, its debt burden will remain at 12-13 percent level.
The bank’s latest default was at a high level of Rs 658 crore, and was driven by higher contribution from microfinance portfolio (MFI) and pressure in the agriculture portfolio.
Indicating a decline in the problem, a bank official said that MFI defaults were the highest in May and some decline has been estimated in June and July.
Total loan defaults rose to Rs 437 crore from Rs 173 crore in the April-June period, impacting margins.
Gross non-performing assets jumped to 1.91 percent quarterly from 1.84 per cent in the previous quarter.
From a loan growth perspective, the MFI book grew 4 percent, the commercial segment grew 30 per cent, credit cards grew 16 percent and continent grew 4 per cent as better-rated companies preferred funding from bond business.
Going forward, the bank expects gold loans to grow 25-30 percent and quarterly loan growth to be up to 10 percent for FY26 due to the supported season.
The bank’s overall equity ratio stood at 16.03 percent as of June 30, 2025, while core balance stood at 14.69 percent.
