Equitas Small Finance Bank (EQUITASBNK) Q1 25/26 earnings summary

Executive summary

• Reported a Q1 FY26 net loss of INR 224 crores (₹22,376.33 lakh) due to significant additional provisions and changes in provisioning norms, marking the first loss since 2008.

• Gross advances grew 8% YoY to INR 37,610 crores, with non-MFI book up 18% YoY and SBL segment up 22% YoY.

• Deposits increased 18% YoY to INR 44,379 crores, with CASA ratio stable at 29%.

• PPOP remained healthy at INR 316 crores, reflecting core operational strength despite provisioning impact.

• Strategic focus on reducing MFI exposure, with 90% of the loan book now secured and diversified.

Financial highlights

• Net interest income for Q1 FY26 was INR 786 crores; other income at INR 286 crores.

• Net interest margin declined to 6.55% from 7.97% YoY, mainly due to contraction in the MFI portfolio.

• Operating expenses rose 16% YoY, with employee costs up 23% YoY.

• Treasury income rose 321% YoY, contributing INR 116 crores.

• Credit cost surged to 6.48% in Q1 FY26 due to additional provisions.

Outlook and guidance

• Credit costs are expected to taper by Q4 FY26, with normalization of microfinance stress and a return to profitability targeted for the year.

• Projecting 15-16% overall asset growth for FY26, with secured book expected to grow over 20% YoY.

• ROA guidance remains at 1% for Q4 exit, with progressive improvement expected in FY27.

• Cost-to-income ratio expected to peak in FY26, then moderate to 60-65% over the next two years.

• Additional capital raised to support growth, with plans for a Tier 1 equity raise in the next fiscal year.