Equitas Small Finance Bank reported a 36% year-on-year increase in net profit to Rs 90 crore for the quarter ended December, despite making a one-time incremental provision of Rs 29.5 crore following the implementation of the new Labour Code during the October–December period.
Net interest income (NII) rose 4% on year to Rs 852 crore, while net interest margin (NIM) improved by 43 basis points (bps) quarter-on-quarter to 6.72%.
Margin Expansion and Asset Quality
Gross advances grew 16% YoY to Rs 43,268 crore, supported by robust disbursements across verticals, the bank said. Total disbursements during the quarter rose 28% on year to Rs 6,557 crore. “Targeting mid-teen growth in overall advances for FY26, primarily driven by the secured (non-MFI) portfolio, which offers a stable yield of around 15%,” the bank said in its investor presentation.
Liability Shift
Deposits increased 7% YoY to Rs 43,668 crore as on December 31. The cost of funds declined by 22 bps to 7.13% during the quarter, aided by lower rates offered on savings accounts and term deposits. The recently launched foreign currency non-resident (FCNR) deposit book crossed $20 million, the bank reported. As on December 31, the credit-deposit ratio stood at 92.96% in Q3FY26, higher than 84.09% in the preceding quarter.
Provisions and contingencies declined over 20% on year to Rs 193.45 crore during the quarter. The provision coverage ratio stood at 67.10% as on December 31. Asset quality improved, with the gross non-performing asset (NPA) ratio easing to 2.62% from 2.82% a quarter ago, while the net NPA ratio declined to 0.88% from 0.95%. Net slippages in both the microfinance (MFI) and non-MFI portfolios improved during the quarter, taking the net slippage ratio to 2.52%, the lowest level for the bank in the past six quarters.
On Thursday, the shares of Equitas Small Finance Bank closed 0.5% lower at Rs 69.16 on NSE.