Equitas Small Finance Bank (EQUITASBNK) Q2 24/25 earnings summary

Executive summary

• Retail deposit growth remained strong, with 74%–79% of deposits being retail and continued healthy mobilization during the quarter.

• Technology investments in CRM, Super App, and borrower apps progressed well, supporting operational efficiency and digital lending initiatives contributed ₹350 crore in disbursements.

• Treasury operations contributed positively, leveraging market opportunities across asset classes.

• Small Business Loans (SBL), Housing Finance, and Micro LAP segments showed robust growth, while new commercial vehicle loans remained subdued.

• Microfinance portfolio stress persisted, with elevated slippages, additional provisions, and a sharp drop in net profit to ₹13 crore in Q2FY25.

Financial highlights

• Net interest income for the quarter was ₹802 crore; other income was ₹229 crore, leading to total net income of ₹1,031 crore, up 11% year-over-year.

• Operating expenditure rose 14% year-over-year to ₹681–682 crore; cost-to-income ratio increased to 66.09%.

• Pre-provision operating profit (PPOP) grew 6% year-over-year to ₹350 crore; PPOP to assets stable at 2.94%.

• Credit cost for the quarter was ₹330 crore, with microfinance credit cost at ₹241 crore and extra provisions of ₹146 crore.

• Net profit for Q2 FY25 was ₹1,288 lakh, down from ₹19,814 lakh in Q2 FY24.

Outlook and guidance

• Credit cost for non-microfinance portfolio (84% of advances) at 1.04% for H1, expected to improve in H2.

• Microfinance stress likely to persist for another two quarters; no formal guidance on credit cost or growth for the year.

• Cost-to-income ratio expected to remain elevated for 2–3 years due to ongoing investments in products and technology.

• Long-term ROA target is around 2% once credit costs normalize.

• Focus continues on high-yield products and digital initiatives to drive growth.