Federal Bank delivered strong Q3 results that exceeded market expectations, with net profit rising 9% and net interest income growing robustly. The private sector lender's shares surged 8% following the earnings announcement, snapping a five-day losing streak and demonstrating investor confidence in the bank's operational performance.

Strong Financial Performance Beats Estimates

Federal Bank's Q3 net profit increased 8.98% year-on-year to ₹1,041.00 crores, marginally higher than analyst estimates of ₹1,000.00 crores. The bank's net interest income (NII) grew 9% from the previous year to ₹2,653.00 crores, exceeding the CNBC-TV18 poll estimate of ₹2,563.00 crores. Total income increased to ₹7,968.00 crores from ₹7,725.00 crores in the same period last year, while interest income rose to ₹6,867.00 crores compared to ₹6,809.00 crores in the year-ago period.

Significant Asset Quality Improvement

The bank demonstrated substantial improvement in asset quality metrics during the quarter. Gross Non-Performing Assets (GNPA) ratio improved to 1.72% from 1.95% in the same quarter last year, while Net NPA ratio declined to 0.42% from 0.49% in the corresponding period. The Capital Adequacy Ratio marginally rose to 15.20% from 15.16% at the end of the third quarter of the previous financial year.

Provisions and Business Expansion

Overall provisions, excluding tax, increased to ₹332.00 crores during the quarter from ₹292.00 crores a year ago, indicating controlled credit costs despite the growth in business. During the quarter, the bank added 6 branches in line with its calibrated and market-focused expansion strategy.

Strategic Investment in Insurance Business

Federal Bank increased its stake in Ageas Federal Life Insurance Company from 26% to 30% through the acquisition of 3.20 crore shares at ₹30.45 per share. The transaction, completed in November, received all requisite approvals from the RBI and IRDAI, further strengthening the bank's strategic partnership in the life insurance business.

Strong Stock Performance and Market Response

Shares of Federal Bank surged 8.40% to ₹267.50 following the earnings announcement, approaching its recent record high of ₹271.10. The stock has gained 36% over the past month, reflecting strong investor confidence. The positive market response came after the stock had declined in seven out of the last eight sessions prior to the results announcement.

Performance Summary

Federal Bank's Q3 results demonstrate comprehensive operational strength across profitability, asset quality, and core income generation. The combination of beating profit and NII estimates, significant year-on-year asset quality improvements, strategic business expansion, and insurance sector investment reflects the bank's effective balance sheet management and growth strategy during the reporting period.

Federal Bank has announced that its statutory auditor has undergone a structural transformation, converting from a traditional partnership to a Limited Liability Partnership (LLP) format. The bank communicated this development to stock exchanges on January 15, 2026, in compliance with regulatory disclosure requirements.

Auditor Conversion Details

The statutory auditing firm M S K A & Associates, Chartered Accountants, formally converted to M S K A & Associates LLP, Chartered Accountants, effective January 13, 2026. The conversion was executed under the provisions of the Limited Liability Partnership Act, 2008.

Regulatory Compliance and Communication

The bank received formal intimation from the auditing firm through a letter dated January 14, 2026, which was communicated via email on January 15, 2026. Federal Bank promptly disclosed this information to both the National Stock Exchange of India Limited and BSE Limited under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The communication was signed by Samir P Rajdev, Company Secretary of Federal Bank, and included the original intimation letter from the auditing firm for reference.

Continuity of Audit Services

Federal Bank has confirmed that the structural conversion does not result in any changes to the existing audit engagement. Key aspects of the continuity include:

• M S K A & Associates LLP will continue as the bank's statutory auditor
• The firm will discharge all responsibilities for the remaining tenure of appointment
• No disruption to ongoing audit processes or timelines
• Maintenance of existing professional relationships and arrangements

Official Documentation

The intimation letter from M S K A & Associates LLP was signed by Swapnil Kale, Partner (Membership Number: 117812), and dated January 14, 2026, from Mumbai. The firm specifically requested that Federal Bank send appropriate intimation to stock exchanges regarding this structural change.

Federal Bank has made this information accessible on its official website at www.federal.bank.in , ensuring transparency and easy access for stakeholders and investors.