Equitas SFB swings to ₹184 cr profit as bad-loan provisions shrink 73%
Q1 net profit of ₹184 crore versus a ₹224 crore loss a year ago. Gross NPAs ease to 2.42% as microfinance stress recedes.
— 4 earlier stories on Equitas Small Finance Bank Ltd. →What's new
- Net profit of ₹184 crore against a loss of ₹224 crore a year earlier.
- Provisions fell to ₹161 crore from ₹612 crore; gross NPA ratio improved to 2.42%.
- Total income rose 14% to ₹2,216 crore; capital adequacy stood at 19.44%.
Why this matters
The sharp drop in provisions confirms the microfinance stress is behind Equitas. With credit costs normalising and secured lending gaining share, the path to higher ROA is clearer. However, a trailing ROE of just 2.5% and a pending ₹1,250-crore QIP mean the equity story is still being written.
What we're watching
- Whether net interest margins hold as the loan mix shifts to secured retail assets.
- Utilisation of the planned ₹1,250-crore QIP and its impact on return ratios.
- Credit cost trajectory through FY27 — can it stay near current levels?
The full read
A sharp reversal. Equitas Small Finance Bank posted Q1 net profit of ₹184 crore, reversing a ₹224 crore loss a year ago, as provisions collapsed to ₹161 crore from ₹612 crore, a 74% drop reflecting the end of the microfinance stress cycle. Gross NPAs eased to 2.42% from 2.60% in March; net NPAs fell to 0.71%. Total income rose 14% to ₹2,216 crore, and capital adequacy stood at 19.44%. The credit cycle has turned. But the bank still carries a trailing ROE of just 2.5% and trades at 83.4 times earnings, while the board has already lined up a ₹1,250-crore QIP, roughly 14% of market cap, to fund growth. The next test: converting lower credit costs into higher shareholder returns.
Questions answered
- What drove Equitas SFB's return to profit?
- Provisions shrank 74% to ₹161 crore from ₹612 crore a year ago, as the microfinance stress that caused the loss in Q1 FY26 eased sharply.
- How is asset quality trending?
- Gross NPAs improved to 2.42% from 2.60% in March, and net NPAs fell to 0.71%. The bank is also shifting its loan book toward secured retail assets.
- Why is the bank raising capital if it is profitable?
- The board approved a QIP of ₹1,250 crore in June — about 14% of market cap — to fund growth as the credit cycle turns and lending resumes.
- What is the current return on equity and valuation?
- Trailing ROE is only 2.5%, reflecting past stress. The stock trades at 83.4 times trailing earnings, implying expectations of a sharp improvement.
- What is the main risk going forward?
- Low return on assets remains a watchpoint. The bank needs to convert lower credit costs into higher profitability, and the QIP will dilute existing shareholders.
Equitas Small Finance Bank Ltd.
Latest quarter · Mar 2026
Returns & growth
Story so far
All notes on EQUITASBNK →- 28 Jul 2026 · 3:02 PM IST Equitas SFB swings to ₹184 cr profit as bad-loan provisions shrink 73%
- today Equitas SFB swings to ₹184 cr profit as credit costs normalise
- 34d ago Equitas SFB board clears ₹1,250 cr QIP, ₹500 cr NCD plan
- 39d ago Equitas SFB to seek nod for QIP, NCD raise at June 24 board meet
- 52d ago Mirae Asset crosses 5% in Equitas SFB