Federal Bank Share Price Falls Despite Decadal Best Asset Quality and ₹1.20 Dividend

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.

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