Earnings Review
Equitas Small Fin Bk reports net loss as provisions double
This story was originally published at 16:33 IST on 8 August 2025
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--Equitas Small Finance Bank Apr-Jun net loss INR 2.24 bln
--Analysts saw Equitas Small Finance Bank Apr-Jun net profit INR 289.43 mln
--Equitas Small Fin Bank Q1 net loss INR 2.24 bln vs 257.57 mln PAT yr ago
--Equitas Small Fin Bk Q1 total income INR 19.4 bln vs INR 17.1 bln yr ago
--Equitas Small Fin Bk Q1 provisions INR 6.12 bln vs INR 3.05 bln year ago
--Equitas Small Fin Bk gross NPA ratio 2.92% as on Jun 30 vs 2.89% qtr ago
--Equitas Small Fin Bk net NPA ratio 0.98% as on Jun 30, unch from qtr ago
--Equitas Small Fin Bk Basel II capital adequacy ratio 20.48% as on Jun 30
By Vidhushi RajPurohit
MUMBAI – Equitas Small Finance Bank reported a net loss for the quarter ended June on account of a sharp jump in the bank's provisions. A rise in the bank's total expenses also weighed. The bank's bottomline slid sharply as provisions for the June quarter nearly doubled on year despite a rise in its total income both on-year and on-quarter. The bank's financial performance was sharply below Street's view as brokerages had estimated the bank to report to a net profit of INR 289.43 million.
The bank's net loss for the June quarter was at INR 2.24 billion compared to a net profit of INR 257.57 million a year ago. The total expenses of the bank rose nearly 19% on year to INR 16.26 billion. The provisions of the bank jumped to INR 6.12 billion, from INR 3.05 billion a year ago.
The rise in provisions was a result of the bank making additional standard asset provision of INR 1.85 billion in the microfinance segment and another INR 1.45 billion towards additional net non-performing assets provision due to change in norms, the bank said in a press release.
The increased provisions and expenses offset the year-on-year rise in the bank's total income, leading to a sharp fall in the bottomline. The total income of the bank rose by 13.5% on year to INR 19.41 billion. The interest on balances with the Reserve Bank of India and other inter bank funds climbed by 143.3% on year to INR 536.51 million in the June quarter.
The total credit cost of the lender soared to 6.48% in Apr-Jun from 2.74% in the March quarter. According to the brokerages tracking the bank, the credit cost of the small finance bank was expected to remain elevated on the back of persistent stress in the microfinance portfolio. In its investor presentation, the bank said it expects the microfinance stress to normalise by March quarter.
The gross advances of the bank posted a muted 8% on year growth to INR 376.10 billion and were nearly flat on quarter on account of a contraction in the bank's microfinance loan book, the bank said. The total deposits of the lender grew to INR 443.79 billion, up by 18% on year. The cost of funds of banks also inched up to 7.49% from 7.46% a year ago. The net interest margin of the bank contracted sharply to 6.55% in June quarter from 7.97% in the corresponding quarter last year.
On the asset quality front, the gross non-performing asset ratio of the bank was at 2.92% as on Jun 30, up from 2.89% a quarter ago. The ratio stood at 2.75% when the gross advances of the bank included the securitization book, as per the investor presentation. The net non-performing asset ratio of the bank was at 0.98%, flat on quarter. The Basel-II capital adequacy ratio was at 20.48%, down from 20.55% a year ago.
Shares of the bank ended 0.8% lower at INR 56.49 on the National Stock Exchange. End
Edited by Vandana Hingorani
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