Federal Bank, the sixth-largest private bank in India, reported a drop of 14.6% in its net profit for the April-June quarter of 2025. The profit fell to ₹861.8 crore compared to ₹1,009.5 crore in the same period last year.
This decline was mainly due to a sharp jump of 177% in provisions and contingencies (money set aside for possible loan losses), which rose to ₹400.2 crore from ₹144.3 crore. Most of these provisions were related to the agriculture and microfinance (MFI) sectors.
Despite the profit drop, the bank showed improvement in other key areas. Operating profit increased by 3.7% to ₹1,556.3 crore, and net interest income grew by 2% to ₹2,336.8 crore. However, the rise in interest expenses (7.7%) was higher than the rise in income (5.6%), which affected earnings growth.
Federal Bank’s total loans went up by 9.2% to ₹2,41,204 crore. Retail loans (like home or personal loans) increased by 15.6% to ₹81,046.5 crore. Deposits also grew by 8% to ₹2,87,436 crore.
The bank’s asset quality improved as bad loans (NPAs) reduced. Gross NPA fell to 1.91% from 2.11%, and net NPA dropped to 0.48% from 0.60%. Its capital adequacy ratio, which shows financial strength, improved to 16.03% from 15.57%.
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KVS Manian, MD and CEO of the bank, said that the bank had a strong operational quarter. He added that the worst in the MFI sector might be over, and provisions in that area should start reducing.
while high provisions hurt profits, Federal Bank showed strong growth in loans, deposits, and asset quality—indicating good long-term performance.
