Fedbank Financial Services Q2FY26 Net Profit Rises 24% YoY to ₹80.2 Crore

Mumbai, October 17, 2025: The shares of Fedbank Financial Services Limited closed with a 0.68% dip on Friday, reported a healthy year-on-year (YoY) net profit growth of 24.2% to ₹80.2 crore in the quarter ended September 30, 2025 (Q2FY26) due to strong interest income growth and operational efficiency.

Financial Highlights

In Q2FY26, interest income rose to ₹501.1 crore from ₹457.7 crore in Q2FY25, resulting in 9.5% YoY and 1.9% QoQ growth. Interest expenses also remained stable at approximately ₹213.8 crore, slightly down from the preceding quarter and stable relative to Q2FY25.

Thus, net interest income (core) was up 18% YoY to ₹287.2 crore and up 5% sequentially, and total net interest income rose 10.9% YoY to ₹293.9 crore, reflecting widening margins in lending. Operating profit in the quarter increased 10.1% YoY to ₹139 crore, 11.1% up from Q1FY26. Profit after tax (PAT) of the bank increased 24.2% YoY to ₹80.2 crore, up 6.9% sequentially.

Business Performance

Assets Under Management (AUM) were ₹16,136 crore, up 13.5% YoY and 2.8% sequentially due to healthy disbursements. Quarterly disbursements were ₹5,205 crore, up 36.6% over the corresponding quarter of the prior year, although lower than Q1FY26. This growth in AUM demonstrates Fedfina’s continued strength in retail lending, particularly in collateral-backed loans.

Assets Quality and Ratios

Fed Financial Services maintained healthy asset quality in the quarter. Gross NPA was at 1.9%, and Net NPA was at 1.3%, lower by 17 basis points compared to the corresponding quarter of the previous year. The cost-to-income ratio was 56.9%, 172 basis points lower than Q2FY25, indicating higher operational efficiency. Return on Average Equity (ROAE) increased to 12.0%, up 107 basis points year on year (YoY), and Capital to Risk-Weighted Assets Ratio (CRAR) was healthy at 21.6%, up 24 basis points YoY.

In the quarter, it had disposed of a defaulted pool of gross NPAs with a value of ₹79.5 crore, including ₹41 crore of written-off principal, to an Asset Reconstruction Company in exchange for ₹32.6 crore in cash, representing 41% of the principal value. This was a pool dominated by small-sized ticket Loan Against Property (LAP) and affordable housing loans. Gross and net Stage III assets reduced to 1.9% and 1.3%, respectively, and the credit cost in the quarter was 0.9%.

Operational Updates

Fedbank Financial Services Limited expanded its branch network to 699 branches across 17 states and union territories. In the quarter, 49 MSE LAP branches have been co-located with the existing Gold Loan branches, and 57 new Gold Loan branches have been added. Workforce increased to 4,894 staff members, a 3.2% YoY increase (excluding NAPS apprentices), to support its retail lending and operational coverage expansion.

Management Overview

Fedfina continues to strengthen its retail lending thrust, with its collateral-based approach to pursue self-employed and new customer markets. Ongoing asset quality, profitability, and return ratio improvement testify to the efficiency of operations and prudent risk behaviour.

REF: https://nsearchives.nseindia.com/corporate/FEDFINA_17102025161908_Press_release17102025_Signed.pdf

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