Equitas SFB swings to ₹184 cr profit as credit costs normalise
Second consecutive quarter of normalised provisioning; microfinance recovery complete. Management targets ROA of 1.2-1.25% for FY27.
— 4 earlier stories on Equitas Small Finance Bank Ltd. →What's new
- Net profit of ₹184 cr in Q1 FY27 vs loss of ₹224 cr YoY.
- Gross advances up 27% YoY; GNPA improves to 2.36% from 2.49% QoQ.
- Credit cost falls to 1.37% from 6.48% a year ago, second quarter of normalisation.
Why this matters
After two years of elevated credit costs from microfinance defaults, Equitas has turned around. With credit costs normalised and collection efficiency above 99%, the bank can now focus on growth and profitability. The capital raise of ₹1,250 cr through QIP (about 14% of market cap) will support future expansion.
What we're watching
- Execution on FY27 ROA guidance of 1.2-1.25%.
- Whether the QIP gets fully subscribed given the improved earnings profile.
- Any residual stress in the microfinance book as collection efficiency stabilises.
The full read
Equitas Small Finance Bank's ₹184 crore Q1 profit marks the end of a two-year microfinance crisis that cost it over ₹1,100 crore in credit costs in FY25 alone. Gross advances grew 27% year on year, while the credit cost ratio collapsed from 6.48% to 1.37% — now firmly within normal territory. Gross NPAs edged lower to 2.36% from 2.49% quarter on quarter. Management is guiding for a return on assets of 1.2-1.25% for FY27, exiting Q4 at around 1.5%. The bank is also raising ₹1,250 crore via a QIP (some 14% of market cap) to fund growth. For a mid-cap bank trading at 83x trailing earnings, the earnings visibility has improved materially.
Questions answered
- How did Equitas manage to swing to profit?
- Driven by 27% advances growth and a sharp reduction in credit cost from 6.48% to 1.37%, the bank posted a net profit of ₹184 cr against a loss of ₹224 cr a year ago.
- What is the credit cost trend?
- After incurring over ₹1,100 cr in credit costs in FY25 alone, costs normalised to around 1% by Q4 FY26 and stood at 1.37% in Q1 FY27.
- What is management's guidance for FY27?
- Management targets a return on assets of 1.2-1.25% for FY27, with an exit rate of around 1.5% by the fourth quarter.
- How does the QIP fit into the picture?
- In June, the board cleared a ₹1,250 cr QIP (about 14% of market cap) and a ₹500 cr NCD plan to strengthen capital for future growth.
- What about asset quality?
- Gross NPAs improved to 2.36% from 2.49% in the preceding quarter, and microfinance collection efficiency recovered to 99.4% by December 2025.
- Is the microfinance stress fully behind Equitas?
- Two consecutive quarters of normalised credit costs and improving collection metrics suggest the worst of the microfinance stress is over.
Equitas Small Finance Bank Ltd.
Latest quarter · Mar 2026
Returns & growth
Story so far
All notes on EQUITASBNK →- 28 Jul 2026 · 3:22 PM IST Equitas SFB swings to ₹184 cr profit as credit costs normalise
- today Equitas SFB swings to ₹184 cr profit as bad-loan provisions shrink 73%
- 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