Synopsis: Indusind Bank and Federal Bank both saw positive investor sentiments after the Q2 FY26 results were declared. However, Indusind Bank’s profitability was impacted mainly by accounting malpractices during the quarter.
In this article, we will compare two of the leading private banks, namely Indusind Bank and Federal Bank, across key parameters like profitability, asset quality, deposits, and advances, etc, and in the end we will look at which one of the two performed better.
Revenue and Profitability
IndusInd Bank reported a Net Interest Income (NII) of Rs 4,409 crore in Q2 FY26, representing a 18 percent decline from Rs 5,347 crore in Q2 FY25. Additionally, it recorded a decline of 5 percent from its previous quarter figure of Rs 4,640 crore.
Coming to its profitability front, IndusInd Bank reported a net loss of Rs 437 crore in Q2 FY26 as compared to a profit of Rs 1,331 crore in Q2 FY25 and a profit of Rs 604 crore in its previous quarter.
On the other hand, Federal Bank reported a Net Interest Income (NII) of Rs 2,495 crore in Q2 FY26, which is a growth of 5.4 percent from Rs 2,367 crore in Q2 FY25. Additionally, it recorded a growth of 6.8 percent from its previous quarter figure of Rs 2,337 crore.
Federal Bank reported a profit decline of 10 percent to Rs 955 crore in Q2 FY26 as compared to Rs 1,057 crore in Q2 FY25. However, on a quarterly basis, it recorded a growth of 11 percent from Rs 862 crore.
Overall, Federal Bank clearly outperformed IndusInd Bank during the period. IndusInd’s weak performance was mainly due to a sharp fall in profitability, as it reported a massive loss of Rs 2,329 crore.
The bank faced issues related to poor corporate governance and accounting irregularities, which forced its new CEO, Rajiv Anand, to clean up the books. As part of this, the bank wrote off Rs 1,940 crore from its microfinance loan portfolio and made heavy provisions for potential bad loans.
A senior official mentioned that Rs 900 crore of these provisions were additional, taken specifically because of the cleanup, while the remaining Rs 2,631 crore were part of its regular provisioning process.
Asset Quality
Indusind Bank’s asset quality worsened during the period. GNPA increased by 149 bps to 3.60 percent as compared to 2.11 percent in Q2 FY25. Also, NNPA increased by 40 bps and currently stands at 1.04 percent as compared to 0.64 percent in Q2 FY25. Provision Coverage Ratio increased by 200 bps to 72 percent.
On the other hand, Federal Bank’s asset quality strengthened during the period. GNPA decreased by 26 bps to 1.83 percent as compared to 2.09 percent in Q2 FY25. Also, NNPA slightly decreased by 9 bps and currently stands at 0.48 percent as compared to 0.57 percent in Q2 FY25. Provision Coverage Ratio increased by 163 bps to 73.45 percent. However, the Slippage ratio slightly increased by 18 bps to 0.94 percent.
Here, in terms of asset quality, Federal Bank performed better as compared to Indusind Bank.
Deposits and Advances Growth
Indusind Bank’s total deposits have declined by 6 percent to Rs 3,89,600 crore in Q2 FY26 as against Rs 4,12,397 crore in Q2 FY25. CASA deposits were Rs 1,19,771 crore, with current account deposits at Rs 31,916 crore and Savings Account deposits at Rs 87,854 crore. CASA deposits accounted for 31 percent of the total deposits as of September 30, 2025.
Coming to total advances, it has a total loan book of Rs 3,25,881 crore, which declined by 9 percent YoY and 2 percent QoQ, where 60 percent of its loan book is exposed to consumer banking and the remaining 40 percent to corporate & commercial banking.
On the other hand, Federal Bank’s total deposits have increased by 7 percent to Rs 2,88,920 crore in Q2 FY26 as against Rs 2,69,107 crore in Q2 FY25. CASA deposits were Rs 89,591 crore, with current account deposits at Rs 19,233 crore and Savings Account deposits at Rs 70,358 crore. CASA deposits accounted for 31 percent of the total deposits as of September 30, 2025.
Coming to total advances (customers), it has a loan book of Rs 2,55,613 crore, which grew by 6 percent YoY and 2 percent QoQ, highlighting a strong creation of asset base for the future.
Overall, Federal Bank showed steady growth with higher deposits and loan expansion, while IndusInd Bank saw declines in both. However, both maintained a healthy CASA ratio of 31 percent.
Other Key Ratios
Indusind Bank reported a Net Interest Margin of 3.32 percent, which declined 76 bps YoY and 14 bps QoQ. It reported a negative ROE and ROA of 2.68 percent and 0.33 percent respectively. Cost of Income also increased significantly by 1401 bps YoY and 399 bps QoQ to 66.22 percent.
On the other hand, Federal Bank reported a Net Interest Margin of 3.06 percent, which declined 6 bps YoY but increased by 12 bps QoQ. It reported an ROE and ROA of 11.01 percent and 1.09 percent respectively, both declined during the period. Cost of Income also increased by 103 bps YoY but declined by 85 bps QoQ to 54.04 percent.
Overall, Federal Bank was more impressive and resilient than IndusInd Bank when comparing their performances across the sector. IndusInd was affected by governance issues, had to make heavy write-offs, and saw its deposits and advances decline, whereas Federal Bank kept on growing, asset quality remained stable, and profitability was maintained. Even though margins dropped a little, Federal Bank was able to beat IndusInd Bank on the back of its strong basics and good management in the quarter under review.
Written by Satyajeet Mukherjee
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
The post IndusInd Bank Vs Federal Bank: Which bank performed better in Q2 FY26? appeared first on Trade Brains.