💰 Financial Performance

Revenue Growth by Segment

Commercial Banking grew 27% YoY to INR 27,199 Cr; Retail Banking grew 14% YoY to INR 69,268 Cr; Gold Loans grew 21% YoY to INR 30,505 Cr; CV/CE Advances grew 35% YoY to INR 4,644 Cr; Corporate Banking grew 8% YoY to INR 79,774 Cr.

Geographic Revenue Split

Not explicitly disclosed in percentage by region, but the bank maintains a strong liability franchise with a sizable portion of non-resident (NRI) deposits and is expanding its geographic footprint across India.

Profitability Margins

Net Interest Margin (NIM) stood at 3.06% in Q2 FY26, improving 12 bps from 2.94% in Q1 FY26. Return on Average Assets (ROA) was 1.09% in Q2 FY26 compared to 1.23% in FY25. Return on Average Equity (ROE) was 11.01% in Q2 FY26, down from 13.03% in FY25.

EBITDA Margin

Pre-Provision Operating Profit (PPOP) for FY25 was INR 6,101 Cr, representing an 18% YoY growth. PPOP to average total assets for FY24 was 2.88%.

Capital Expenditure

Not disclosed as traditional CapEx; however, the bank raised INR 3,040 Cr via QIP and INR 959 Cr from IFC in July 2023 to support business scale-up.

Credit Rating & Borrowing

Credit ratings reaffirmed based on strong liability franchise. Total borrowings stood at INR 23,726 Cr as of March 31, 2025, a 32% increase YoY. Cost of borrowing decreased by 3 bps in Q2 FY26.

⚙️ Operational Drivers

Raw Materials

Cost of Funds (Deposits) is the primary input cost. Total Deposits reached INR 2,83,647 Cr (up 12% YoY), with Term Deposits at INR 1,97,270 Cr (up 11%) and CASA at INR 86,378 Cr (up 16%).

Import Sources

Sourced domestically across India, with a significant contribution from Non-Resident Indian (NRI) deposits.

Key Suppliers

Retail and corporate depositors; Reserve Bank of India (RBI) for liquidity windows.

Capacity Expansion

Total Assets stood at INR 3,56,080 Cr in Q2 FY26. Expansion is driven by digital migration and a mix of organic growth and fintech partnerships.

Raw Material Costs

Deposit costs decreased by 19 bps in Q2 FY26, which directly contributed to NIM expansion as the yield on advances only dropped by 14 bps.

Manufacturing Efficiency

Profit per employee stood at INR 23 lakh; Business per employee reached INR 32.06 Cr in Q2 FY26.

Logistics & Distribution

Distribution strategy involves a mix of physical branches and digital platforms; fee to average assets ratio crossed 1% for the first time in Q2 FY26.

📈 Strategic Growth

Expected Growth Rate

12-15%

Growth Strategy

Recalibrating asset mix toward high-yield segments (Credit Cards, CV/CE, and Commercial Banking); scaling organic credit card sourcing; pilot launching tractor business; and expanding wealth management and forex services to drive fee income above 1% of average assets.

Products & Services

Retail loans, Gold loans, Commercial Vehicle/Construction Equipment (CV/CE) finance, Corporate banking, Credit cards, Wealth management, and Supply chain finance (dealer/vendor finance).

Brand Portfolio

Federal Bank, Fedbank Financial Services (Fedfina), FedServ.

New Products/Services

Tractor loans (pilot launched Q1 FY26), organic credit cards, and structured business solutions via a new dedicated desk.

Market Expansion

Focusing on mid-corporate ecosystems and high-yield retail segments; expanding digital end-to-end integrated supply chain platforms.

Market Share & Ranking

Positioned as a market leader in niche segments like NRI deposits and specific commercial banking verticals.

Strategic Alliances

Partnerships with various fintech firms for asset acquisition and digital service delivery.

🌍 External Factors

Industry Trends

Industry-wide moderation expected in FY 2025-26 due to slower NBFC/unsecured loan growth and revised project finance norms; shift toward relationship-driven banking to sustain margins.

Competitive Landscape

Competes with large private banks; differentiates through lower cost of funds and niche market expertise in CV/CE and NRI services.

Competitive Moat

Strong liability franchise with high core deposit ratio (98%); diversified and granular portfolio with improving asset quality (GNPA reduced 71 bps in Commercial Banking to 2.07%).

Macro Economic Sensitivity

Sensitive to interest rate cycles due to T+1 repricing; GDP growth correlates with the 27% growth seen in the Commercial Banking vertical.

Consumer Behavior

Increasing demand for digital-first banking and wealth management services; shift toward organic credit card adoption.

Geopolitical Risks

Geopolitical uncertainties noted as a potential risk factor for the CV/CE sector predictability in FY 2025-26.

⚖️ Regulatory & Governance

Industry Regulations

RBI guidelines on gold loans (Digi-biz), LCR provisioning, and revised project finance norms are key regulatory hurdles affecting growth in FY26.

Environmental Compliance

Not disclosed.

Taxation Policy Impact

Effective tax rates apply; specific fiscal policy impacts not detailed beyond standard corporate tax.

Legal Contingencies

Not disclosed in specific INR values; bank monitors 'connected exposures' and maintains a management overlay of INR 46 Cr for potential stress.

⚠️ Risk Analysis

Key Uncertainties

MFI segment stress (credit cost was elevated in Q1 FY26); regulatory changes in project finance; and potential margin compression in a falling interest rate environment.

Geographic Concentration Risk

Historically strong in Southern India, but actively diversifying; NRI deposits remain a core but concentrated liability source.

Third Party Dependencies

Reliance on fintech partners for a portion of the loan book; shared upside/downside models in fintech collaborations.

Technology Obsolescence Risk

High focus on IT risk and information security governance following industry-wide regulatory scrutiny of peer banks.

Credit & Counterparty Risk

Gross NPA at 1.83% and Net NPA at 0.48% as of Q2 FY26; Provision Coverage Ratio (PCR) remains healthy at 73.45%.