Federal Bank's Q1 net interest margin seen under pressure, stock drops 4%

Analysts expect improvement in operating efficiency and stable asset quality

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26 Aug, 2025 12:21

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Shares of Federal Bank fell over 4.5 percent during early trade on July 13 ahead of its results announcement for Q1FY24, with the Street expecting its net interest margin to remain under pressure.

At 10.20 am, the stock was trading 4.25 percent down at Rs 128.50 on the BSE.

According to a CNBC-TV18 poll, the private sector lender is expected to report a net profit of Rs 837.9 crore, as against Rs 600.7 crore in Q1 FY23. The net interest income (NII) is expected at Rs 1,963.2 crore, compared to Rs 1,604.5 crore in the corresponding quarter of the previous fiscal.

However, the net interest margin (NIM) is expected to decline on quarter due to rise in cost of funds. NIM for Q4FY23 came at at 3.31 percent.

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Analysts also expect improvement in operating efficiency and stable asset quality. The focus now would be on commentary with respect to liability side challenges, near term growth outlook and normalisation of return ratios. Fund raising plans, if any, will also be closely seen.

Also Read: What can investors expect from banks’ Q1 earnings?

Q4FY23 Show

Federal Bank had reported a net profit for the quarter ended March at Rs 902.61 crore, up 66.98 percent from Rs 540.54 crore recorded in the same quarter last year.

Net interest income came in at Rs 1,909.29 crore, registering a growth of 25.18 percent from Rs 1,525.21 crore.

Other income for the bank in Q4 came in at Rs 733.9 crore as against Rs 465 crore year-on-year. However, capital adequacy ratio (CAR) has declined to 14.8 percent versus 15.8 percent on year.

Total business of the bank reached Rs 3,87,832.93 crore as on 31st March 2023, from Rs 3,26,628.92 crore as on 31st March 2022, registering a growth of 18.74 percent.

Federal Bank shares are down 6.5 percent on YTD basis, but the one year return stands at 31 percent.

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