Federal Bank Q2 FY25 Results: Net Profit Rises 36%, Dividend Announced

Federal Bank Q2 FY25 Results: Net Profit Rises 36%, Dividend Announced

Federal Bank, one of India’s prominent private sector banks, has reported strong financial performance for the second quarter of fiscal year 2025. The results demonstrate the bank's continued growth, with significant increases in net profit and income, alongside a dividend announcement for shareholders.

Key Financial Highlights

1. Net Profit Growth: Federal Bank's net profit surged by 36% year-on-year, reaching ₹953 crore in Q2 FY25 compared to ₹702 crore in the same quarter last year. This growth was driven by an increase in net interest income and improved asset quality.

2. Revenue Increase: The bank reported a total income of ₹5,374 crore for the quarter, reflecting a year-on-year growth of 18%. The rise in income was supported by higher interest income due to loan book expansion and better yields on advances.

3. Net Interest Income (NII): NII, which represents the difference between the interest earned on loans and the interest paid on deposits, increased by 20% year-on-year to ₹1,979 crore. The higher NII indicates better margins on lending and a strong focus on growing the retail and SME loan segments.

4. Asset Quality Improvement: Federal Bank’s asset quality improved, with the gross non-performing assets (GNPA) ratio declining to 2.23% from 2.46% in the previous year. The net NPA ratio also dropped to 0.66%, reflecting better credit management and recoveries.

5. Dividend Announcement: The bank declared an interim dividend of ₹1.80 per share, rewarding shareholders amid the strong financial performance.

6. Capital Adequacy: The bank maintained a healthy capital adequacy ratio (CAR) of 14.89%, well above the regulatory requirement, ensuring financial stability and capacity for future growth.

Strategic Initiatives and Future Outlook

Federal Bank continues to focus on expanding its retail and SME lending portfolios while also strengthening its digital banking initiatives. The bank has been enhancing its technological capabilities to offer better customer experiences and improve operational efficiencies.

Looking ahead, the management is optimistic about sustaining the growth momentum, backed by a robust pipeline in the retail lending segment and increasing traction in digital banking services. The bank aims to further improve its asset quality and maintain stable margins despite macroeconomic challenges.

Conclusion

The Q2 FY25 results underline Federal Bank's solid financial health, marked by strong profit growth, higher income, and better asset quality. The interim dividend announcement is a positive sign for investors, reflecting the bank's confidence in its growth prospects. With strategic initiatives in place, Federal Bank is well-positioned to capitalize on future opportunities in India's banking sector.