Are Federal Bank latest results good or bad?

Federal Bank's financial results for the quarter ending March 2025 reflect a complex operational landscape. The bank has reported a flat performance compared to previous periods, with notable metrics indicating both positive and concerning trends.
On the positive side, Federal Bank achieved its lowest Gross Non-Performing Assets (NPA) ratio at 1.84%, continuing a downward trend observed over the past five quarters. The Net NPA ratio also reached a low of 0.44%, suggesting a reduction in stressed loans, which is a favorable development for the bank's asset quality. Additionally, the Capital Adequacy Ratio (CAR) improved to 16.40%, indicating a stronger capital position relative to its risk assets.

However, the bank's Profit Before Tax (PBT) less Other Income has seen a significant decline of 28.76% year-on-year, totaling Rs 321.34 crore, marking the lowest level in five quarters. This decline raises concerns about the bank's operational profitability. Furthermore, a substantial portion of the PBT, constituting 75.79%, has come from non-operating income, which reached a record high of Rs 1,005.95 crore. This reliance on non-operating income could pose sustainability challenges moving forward.

In terms of specific metrics, the interest earned showed a year-on-year growth of 11.21%, a decrease from the previous year's growth rate of 26.64%. The net profit also reflected a year-on-year growth of 13.67%, compared to a minimal increase of 0.41% in the prior year.

Overall, while Federal Bank has made strides in improving asset quality and capital adequacy, the decline in operational profitability and the heavy reliance on non-operating income are areas that warrant attention. Additionally, the company saw an adjustment in its evaluation over the past three months, reflecting the mixed performance in its financial results.