Equitas Small Finance Bank (EQUITASBNK) Q4 24/25 earnings summary

Executive summary

• FY25 was challenging, with elevated credit costs in microfinance leading to a sharp reduction in profitability and a strategic shift to lower-risk segments.

• Gross advances grew 11% year-over-year to ₹37,986 Cr, led by non-MFI book up 19% and SBL up 25%.

• Deposits increased 19% YoY to ₹43,107 Cr, with CASA ratio at 29%.

• Audited results for FY25 show continued growth in interest earned and total income, with the auditors issuing an unmodified opinion.

• Asset quality showed improvement in some segments, but MFI slippages and credit costs remained elevated.

Financial highlights

• Net interest income for FY25 was ₹3,252 crore; other income was ₹871 crore; total net income grew 9% to ₹4,123 crore.

• Net profit for FY25 was ₹14,704.99 lakh, down from ₹79,896.02 lakh in FY24, mainly due to higher provisions and credit costs.

• Operating expenditure rose 15% YoY, with cost-to-income increasing to 67.64% for FY25 and 70.28% in Q4.

• Credit cost for FY25 was 3.14%, including a one-time floating provision; adjusted credit cost was 2.6%.

• Gross NPA stood at ₹1,068 crore (2.89%), with a provision coverage ratio of 66.83%.

Outlook and guidance

• Microfinance book expected to reduce further to ₹3,000 crore by March 2026, with MFI share in advances dropping to mid-single digits.

• Overall credit growth for FY26 projected in the late teens, despite MFI contraction.

• ROA targeted to exceed 1% by Q4 FY26, with a medium-term goal of 1.5–1.7% by FY27.

• Credit costs anticipated to normalize from Q3 FY26 onward; vehicle finance credit costs expected to normalize in FY26.

• Revised RBI investment portfolio norms implemented from April 2024, resulting in a net positive impact on net worth.