Fedbank Financial Services Limited — Q4 FY26 earnings call

Call held 28 Apr 2026

Management summary

Fedbank Financial Services reported a strong Q4 FY26, with AUM growing 27% to INR 20,000 crores, significantly driven by a 135% YoY surge in gold disbursals. The company achieved a milestone PAT of INR 100.5 crores, marking a 40% YoY increase, and saw its Gross Stage 3 improve to 1.9%. While yields softened slightly due to rapid gold loan growth and fee income declined, the company maintained a robust capital adequacy ratio of 22.4% and expressed cautious optimism for continued growth, particularly in secured lending segments.

Highlights

  • AUM grew 27% to INR 20,000 crores in Q4 FY26, with ex-BL AUM up 41%.

  • Gold disbursals reached INR 10,744 crores in Q4 FY26, up 135% YoY.

  • PAT crossed INR 100.5 crores in Q4 FY26, marking a 40% YoY increase.

  • Gross Stage 3 improved to 1.9% from 2.1% QoQ and 2% YoY.

  • ROA climbed to 2.6% in Q4 FY26, up from 2.5% in Q3 and 2.2% YoY.

Concerns

  • Yields reduced 12 bps year-on-year due to rapid growth in the gold loan book.

  • Fee and commission income declined year-on-year due to lower LAP disbursals and absence of business loan fees.

  • Current geopolitical situation makes the outlook cautious, leading to tanking up on liquidity.

Key financials

2 periods

Headline

  • AUM
    ₹20,000 Cr
    YoY +27%
  • Gross Stage 3
    1.9%
    YoY -5% QoQ -9.5%
  • Capital Adequacy Ratio
    22.4%
    QoQ +9.3%

Q4 FY26

  • Disbursals
    ₹11,664 Cr
    YoY +109%
  • Net Interest Income
    —
    YoY +23.1%
  • Operating Profit
    ₹162 Cr
    YoY +24% QoQ +9%
  • Credit Cost
    0.7%
    YoY -14% QoQ -12.5%
  • PAT
    ₹100.5 Cr
    YoY +40% QoQ +14.4%
  • ROA
    2.6%
    YoY +18.2% QoQ +4%
  • ROE
    14%

What they filed

Q1 FY27: revenue up 29.6%, net profit up 52.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue513 530 536 517 535 +4%555 +5%616 +15%670 +30%
Net profit65 19 72 75 80 +23%88 +363%101 +40%114 +52%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Disbursals (Q4 FY26)
₹11,665 Cr Total
  • Gold Loans ₹10,744 Cr 92.1%
  • Medium Ticket LAP ₹632 Cr 5.4%
  • Small Ticket LAP ₹289 Cr 2.5%

Capital allocation

high confidence
  • M&A Business Loan Portfolio Divestment · Closed · Consideration ₹[object Object] (undisclosed)

    To improve capital efficiency and ring-fence from unsecured lending market deterioration, maintaining secured on-book ratio exceeding 99.5%.

    Derecognized from AUM, improving capital efficiency.

    we 100% assigned our business loan portfolio of INR886 crores, which was executed and derecognized from our AUM. In addition to improving capital efficiency, it also ring-fenced us from further deterioration in the unsecured lending market.
  • Liquidity Liquidity disclosed Tanked up on liquidity in Q4 to counter volatility caused by geopolitical situation in the Gulf, providing a hedge against uncertainty and interest rate volatility in Q1.
    We tanked up on liquidity in the quarter to counter volatility caused by the geopolitical situation in the Gulf.

Guidance & targets

Volume

  • AUM Growth Volume · Going forward · High confidence 20-25%
    Yes, Meghna, so we've been giving an overall guidance last year also. And we said we will be a 20%, 25% AUM growth company, and we'll continue with that.

    — Parvez Mulla

  • Gold Loan Tonnage Growth Volume · Budgeting exercise · High confidence 10-15%
    Yes. when we do our budgeting exercise with gold loan, we start with the tonnage growth irrespective of the price. So we will be budgeting for a 10%, 15% tonnage growth.

    — Parvez Mulla

  • Gold Loan AUM Growth (flattish price) Volume · Next year · High confidence 20-22%
    But overall level, even if you have a flattish kind of a price play next year, we still should see a 20%, 22% growth on the AUM on the gold side for a flattish price.

    — Parvez Mulla

Profitability

  • Credit Costs Profitability · Initial promise · High confidence 1% +-10bps
    Ensure that credit costs remain 1% +-10bps.

    — Parvez Mulla

  • Credit Costs Profitability · FY27 · High confidence remain in a range bound
    In FY27, the credit cost should remain in a range bound, we should work on the opex.

    — Parvez Mulla

  • ROA Expansion Profitability · FY27 · High confidence 20-30 bps betterment on FY26 ROA
    Yes. So the ROA expansion, which I guided was about 20, 30 bps on the FY '26 ROA. The FY '27 ROA, you will see a 20, 30 bps expansion.

    — Parvez Mulla

  • Core Income Profitability · Initial promise · High confidence increased
    Aim for increased core income while reducing reliance on DA income. Use DA as capital allocation strategy

    — Parvez Mulla

Cost

  • Cost Structure Cost · Initial promise · High confidence frugal
    Move towards a frugal cost structure.

    — Parvez Mulla

What to watch in Q1 FY27

Gold Loan Yield Recovery

Q1 FY27
Current Yields softer by 10 bps in Q4 FY26
Target Recovery of gold loan yields

Why it matters

Impacts Net Interest Margin (NIM) and overall profitability, crucial for sustained financial performance.

So, the yield effect is hardly 10 bps and I think in Q1, that we will cover back.

Risks & concerns

  • Geopolitical Situation and Market Volatility

    medium

    Current geopolitical situation creates an uncertain environment, leading the company to tank up on liquidity as a hedge.

    Management acknowledged

  • Gold Price Volatility Impact on AUM Growth

    low

    A potential 10-15% decline in gold prices is mitigated by the company's focus on tonnage growth and expectation of 20-22% AUM growth even with flattish prices.

    Analyst addressed

  • Competition in Gold Loan Market

    low

    Despite competitive market, the company achieved unprecedented disbursals and is operating in its desired zone.

    Management acknowledged

  • Past Delinquencies in Small Ticket LAP

    low

    Management acknowledged past challenges but stated the book has been rebuilt, collections improved, and new book is performing well.

    Management addressed

Q&A highlights

7 direct, 1 evasive
Gold Loan Yields & Growth Strategy Direct
So, the yield effect is hardly 10 bps and I think in Q1, that we will cover back.

Clarifies the reason for softer gold loan yields and management's expectation for recovery, impacting NIM.

Asked by Digant Haria

Impact of New Gold Loan LTV Guidelines Direct
While 90% of the book is less than 75% for FEDFINA, we don't see any impact coming out. And like I said, margin breach, even if there is a margin breach, there is no need of any provisioning or no need of treating it as a delinquent book other than initiating for margin collections with the customer.

Provides clarity on the minimal impact of new LTV guidelines on FEDFINA's asset quality and NPA recognition.

Asked by Digant Haria

Outlook for Small Ticket LAP Portfolio Direct
So definitely, we are positive on the ST LAP business in terms of the past GNPAs also. And we are also confident about the new book that we've written in the last 1.5 years.

Indicates management's increased confidence in a previously challenging segment, signaling potential for future growth and profitability.

Asked by Digant Haria

Impact of New KYC/Assessment Rules on Gold Loan Disbursements Direct
This is actually with effect from 1st of April 2026, the new regime. So it is not about KYC, it is about the assessment. When the exposure increases INR2.5 lakhs, we need to do a basic assessment on the income and basically the cash flow of the customer to understand the profile a bit more in detail.

Clarifies that the new requirement is an assessment, not a KYC rule, and the company is prepared, minimizing impact on disbursements.

Asked by Meghna Luthra

Decline in Other Income / Fee Income Direct
The other income, Meghna, is actually coming from the LAP business. And the LAP business disbursals, they have not been as strong as the gold business disbursals. So that is where you are seeing that piece. And one more element, is also about business, you might be seeing if you're looking at FY25, there is business loans through which I had the fee income coming in, which is not there in the year now.

Explains the reasons for the decline in fee income, linking it to lower LAP disbursals and the absence of certain business loan fees from FY25.

Asked by Meghna Luthra

Fixed vs Floating Book Composition for Interest Rate Risk Direct
So, roughly about a quarter of the book is on fixed. And here, I'm excluding the commercial papers we take. Now commercial papers, we would have 6 months, 1 year also. So if you factor commercial paper of a longer duration also, roughly 30%, 35% would be fixed. So there is some insulation there.

Provides insight into the company's interest rate sensitivity and insulation strategy, crucial for assessing NIM stability.

Asked by Chintan

Mortgage Segment Growth and ST LAP Recovery Direct
Yes, that's how we will. As a strategy, the advantage of having multi-products is that. When you have an injured product, which has come out of an injury, I agree with you, it will take some time to get into the 20 growth story, although we will try it, but we will also be cautious of the quality that we want.

Details the strategy for balancing growth across mortgage segments, acknowledging the cautious approach for ST LAP while leveraging multi-product advantage.

Asked by Shreepal Doshi

Profitability of Small Ticket LAP Book Evasive
See, as we said, we are reviving. We are very bullish on this particular business. And it will be unfair of us to answer that question right now when we have told you that we have gone through a tough period on that, and we've rebuilt that book. So maybe a year later, we should be in a better position to answer that question.

Management deferred answering whether the ST LAP book is currently profitable, indicating it's still in a rebuilding phase and not yet contributing significantly to ROAs.

Asked by Aditya Khandelwal

3 min read 8 chapters

Detailed narrative

Strong AUM and Disbursal Growth

Fedbank Financial Services reported a 27% year-on-year growth in AUM, reaching INR 20,000 crores in Q4 FY26. Excluding business loans, AUM grew 41%. Disbursals for Q4 FY26 surged by 109% to INR 11,664 crores, primarily driven by the gold loan segment. The company added 4,342 crores to its AUM in FY26, demonstrating robust expansion.

Outperformance of Gold Loan Business

The gold loan business surpassed INR 10,000 crores in AUM, marking a 76% year-on-year growth, with tonnage increasing by 12% year-on-year to 12.6 tons. Gold disbursals in Q4 FY26 reached INR 10,744 crores, a 135% increase year-on-year, contributing significantly to overall growth. The doorstep gold loan AUM also grew 108% year-on-year to INR 1,730 crores, highlighting the success of this channel.

Improved Profitability and Asset Quality

The company achieved a PAT of INR 100.5 crores in Q4 FY26, a 40% year-on-year increase, and a full-year PAT of INR 343.6 crores. Gross Stage 3 improved to 1.9% in Q4 FY26 from 2.1% in Q3 FY26 and 2% in FY25, reflecting better asset quality. ROA climbed to 2.6% in Q4 FY26, up from 2.5% in Q3 and 2.2% in FY25, while credit costs for Q4 FY26 stood at 0.7%, with the full-year credit cost at 0.8%.

Robust Capital Adequacy and Funding Initiatives

Fedbank's Capital Adequacy Ratio stood at 22.4% as of March 2026, up from 20.5% in Q3 FY26, providing ample headroom for future growth. The company raised INR 450 crores in subordinated debt during Q4 and executed INR 1,694 crores in direct assignment transactions, releasing capital. The gold co-lending book also increased by INR 1,131 crores to INR 2,127 crores, further strengthening funding and capital efficiency.

Strategic Shift to Secured Lending and ST LAP Rebuilding

The company successfully assigned its INR 886 crores business loan portfolio, ensuring a secured on-book ratio exceeding 99.5%, aligning with its strategy to focus on secured lending. The ST LAP business, after facing past challenges, disbursed INR 289 crores in Q4 FY26, a 39% quarter-on-quarter increase. Management expressed high confidence in the improved collection efficiencies and the new book written over the last 1.5 years, anticipating steady growth and positive ROAs in FY27.

Branch Expansion and Operational Synergies

Fedbank opened 34 new gold branches in Q4, bringing the total new branches for the year to 148. Despite this expansion, AUM per branch reached INR 16.5 crores, an increase of INR 4.4 crores per branch during the year, indicating improved productivity. Additionally, 70 small ticket LAP branches were relocated into gold branch premises, fostering operational synergies and providing both gold loan and LAP services to customers.

Yields, Cost of Borrowing, and Liquidity Management

Yields reduced by 12 bps year-on-year due to the significant growth in the gold loan book, with the back-ended nature of growth optically showing a 28 bps drop. The weighted average cost of borrowing was marginally lower by 4 bps QoQ, but leverage increasing to 4.6% led to interest expenses optically rising by 10 bps. The company proactively tanked up on liquidity in Q4 to hedge against geopolitical volatility and interest rate uncertainty in Q1.

Other Income & Fee Income

Fee and commission income declined year-on-year, primarily attributed to lower LAP disbursals and the absence of fee income from business loans that were present in FY25. Management expects this line item to pick up going forward, anticipating 0.8% to 1% contribution from the fee income side as ST LAP and MT LAP disbursals increase.

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