Shares of Federal Bank, DCB Bank, and South Indian Bank have seen a significant surge, climbing as high as 16% on Monday, October 20, 2025, following the announcement of their strong second-quarter (Q2) results for the fiscal year 2026. The positive performance has resonated with investors, driving increased activity in these private sector banking stocks.

Federal Bank

Federal Bank's shares experienced a notable rise, trading at ₹226.90, a 6.83% increase compared to its previous closing price of ₹212.40. However, later in the day the share price was trading at Rs 225.4, up 6%. Despite a 9.6% year-on-year (YoY) decline in standalone net profit to ₹955.26 crore, the bank reported its highest-ever net interest income (NII) at ₹2,495 crore. The market capitalization of Federal Bank is ₹55783.48 Cr as of October 20, 2025.

The bank's Q2FY26 results showcased a mixed performance. While net profit decreased, the bank achieved record-high net interest income and fee income. Deposits grew by 10.71% YoY, and the CASA ratio improved to 31.01%. The gross non-performing assets (GNPA) eased to 1.83% from 2.09% a year ago, and net NPA stood at 0.48%. The Capital Adequacy Ratio (CRAR) was a strong 15.71%.

The bank's MD and CEO, KVS Manian, mentioned that the bank had started making accelerated provisions for unsecured lending since the third quarter of the last financial year, impacting the net profit. The bank is also considering equity fund raising.

DCB Bank

DCB Bank's shares also saw a substantial surge, closing 12.5% higher at ₹145.1. The bank reported a 17% YoY increase in Net Interest Income to ₹596 crore and a 19% rise in Net Profit to ₹184 crore. Net Interest Margin improved by 3 bps to 3.23%. Asset quality showed significant improvement with credit costs declining to 0.31%. All 22 analysts covering the stock maintain buy ratings, with consensus price targets suggesting a 15.6% upside potential.

DCB Bank's strong Q2 results reflect robust growth in both revenue and profits. The bank's Net Interest Income (NII) increased by 17%, reaching ₹596.21 crore. Operating profit rose 19.1% to ₹304 crore, and net profit surged 18.3% to ₹184 crore. Despite a 32.7% rise in provisions to ₹60.5 crore, DCB Bank maintained stable asset quality, with Gross NPA slightly improving to 2.91% and Net NPA holding steady at 1.21% quarter-on-quarter. The bank has set a target for its NIM, aiming for a range between 3.5% and 3.65%.

Analysts are optimistic about DCB Bank, with Motilal Oswal Financial Services reiterating a "BUY" rating and a target price of ₹165. The brokerage firm expects the bank to maintain credit costs below 45bp for the full year, projecting an FY27E RoA/RoE of 1.01%/15.3%.

South Indian Bank

South Indian Bank's stock experienced a significant boost, gaining 7.16%. The bank reported an 8% year-on-year increase in net profit for the quarter ended September 30, 2025, reaching ₹351.36 crore. The bank's performance was marked by improvements in asset quality and a rise in non-interest income.

Net interest income (NII) for the quarter, however, declined 8% to ₹808 crore. The bank reported a significant increase in non-interest income, which rose by 26% year-on-year to ₹515.73 crore. The gross non-performing asset (GNPA) ratio improved, decreasing by 147 basis points year-on-year to 2.93%. The net non-performing asset (NNPA) ratio also saw a reduction, dropping by 75 basis points to 0.56%.

Loan growth was evident across various segments, with gross advances increasing by 9% year-on-year to ₹92,286 crore. Meanwhile, retail deposits grew by 11% to ₹1,12,625 crore, while NRI deposits rose by 9% to ₹33,195 crore.