As of 11:55 AM on May 2, the share price of Federal Bank is trading 4.3% lower, marking the second consecutive day of decline. On the previous trading day, the stock had already dropped 3.31%. This dip comes despite the company delivering a decent financial performance for FY25.
Total Business Crosses ₹5 Lakh Crore Mark
Federal Bank’s total business crossed a significant milestone of ₹5.18 lakh crore in FY25, registering a year-on-year growth of 12.24%. The net advances rose by 12.15% to ₹2.35 lakh crore, with notable contributions from retail advances (up 14.5%) and commercial banking (up 26.76%).
Record Net Profit and Strong Other Income
The bank reported an annual net profit of ₹4,051.89 crore, an increase of 8.9% over FY24. For the March 2025 quarter alone, the net profit stood at ₹1,030.23 crore, up 13.67% year-on-year and 7.83% quarter-on-quarter. Other income surged 33.44% YoY to ₹1,005.95 crore, backed by a 30.11% increase in fee income.
Decadal Best Asset Quality
Federal Bank achieved its best asset quality in a decade with Gross NPA at 1.84% and Net NPA at 0.44%. The Provision Coverage Ratio improved to 75.37%, reinforcing the bank’s prudent risk management.
Operating Metrics and Margins
For Q4 FY25, the bank’s Net Interest Income (NII) rose 8.31% YoY to ₹2,377.44 crore, with Net Interest Margin (NIM) improving to 3.12%. Return on Assets (ROA) and Return on Equity (ROE) stood at 1.24% and 12.82%, respectively.
Deposit Growth and Capital Strength
Total deposits increased by 12.32% to ₹2.84 lakh crore. The bank’s capital adequacy ratio stood at 16.40% as per Basel III norms, with a Tier I ratio of 15.04%.
Read More: Adani Ports Share Price Rallies 5% After Strong Q4 Results.
Dividend and Strategic Initiatives
The Board has recommended a 60% (₹1.2) dividend on equity shares of face value ₹2. FY25 also saw the launch of several strategic initiatives, including:
- Project Udaan (branch transformation),
- Corporate Internet Banking portal (FedOne),
- Onboarding Bollywood actor Vidya Balan as the brand’s first ambassador,
- Rollout of 150 strategic projects,
- Opening of 85 new outlets, taking the total count to 1,589.
CEO’s Commentary
KVS Manian, MD & CEO, noted: “Crossing the ₹5 lakh crore total business and ₹4,000 crore net profit milestones marks a defining moment in our journey. We remain confident in sustaining our growth momentum through strategic focus and disciplined execution.”
Conclusion
Despite robust financial performance and best-in-decade asset quality, Federal Bank’s stock has faced selling pressure. Investors may be reacting to broader market sentiment or booking profits post-results.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.