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Informist, Tuesday, Sept. 22, 2026

NEW DELHI – India Ratings and Research has affirmed the rating on Federal Bank's debt instruments worth INR 320 billion at 'AA+', with a stable outlook, the lender informed exchanges Tuesday. Of the total, the rating agency has affirmed a rating of 'AA+' on the bank's Basel III tier-II debt securities worth INR 170 billion, and INR 150 billion of infrastructure bonds, the bank said. 

The rating agency credited the bank's "calibrated business growth and healthy asset quality indicators", reflecting its effective internal controls and governance framework. "The rating reflects the continued strengthening of FBL's (Federal Bank) franchise, supported by the expansion of its product profile across profitable segments, broadening diversification of its loan portfolio beyond Kerala, and improving granularity of its liability profile driving profitability," India Ratings and Research said. However, the rating is limited by lower return ratios compared to its peers with higher ratings, followed by "diversification and scaling across high-yielding products," it added. 

The rating may be upgraded in the case of improvement in the lender's visibility on the diversification of asset profile outside its core geographies, along with sustained market share gains in both assets and liabilities. A steady traction in new retail products followed by a growth in other non-interest revenue streams along with a sustained diversification in operating geographies compared to its peers will lead to a positive rating action.

Events that could lead to a negative rating action will be deteriorating funding profile due to a fall in low-cost deposits, rising operating expenses along with a continuous fall in the profitability buffers due to asset quality pressures. Any major drop in core financial reserves leading to the bank's highest-quality capital remaining below 12% for a long time, and a steady long-term loss of customers and market share in either loans or savings accounts will also affect the future ratings negatively. 

For the June quarter, the bank reported a net profit of INR 11.77 billion on total income of INR 82.87 billion. Tuesday, shares of the company closed at INR 327 apiece on the National Stock Exchange, down 1.5% from the previous close.  End

Reported by Radhika Tiwari

Edited by Avishek Dutta

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