Pre-tax profit before provisions and write-offs stood at Rs 402 crore in Q4 FY26, up 29% YoY and 31% QoQ.

Margins expanded meaningfully during the quarter, with Net Interest Margin (NIM) improving to 7.29%, up around 57 bps QoQ. The expansion was driven by higher interest income on advances and a decline in funding costs.

Profitability ratios also improved sharply, with Return on Assets (RoA) rising to 1.46% in Q4 FY26 from 0.32% a year ago, while Return on Equity (RoE) stood at 14.10% compared to 2.79% in the year-ago period.

Efficiency also improved, with the cost-to-income ratio easing to 67.52% in Q4 FY26 from 72.96% in Q3 FY26 and 70.28% in the year-ago period.

On the asset quality front, the bank delivered a clean set of numbers. GNPA reduced by 13 bps QoQ at 2.49% in Q4FY26 as compared to 2.62% in Q3FY26. NNPA reduced by 20 bps QoQ to 0.68% in Q4FY26 as compared to 0.88% in Q3FY26. Credit cost fell sharply to 1.11%, compared to 1.88% in the previous quarter and 2.74% a year ago.

Net slippages reduced significantly by 173 Bps QoQ to 0.79% in Q4FY26 from 2.52% in Q3FY26 at the bank level. Provision coverage ratio remained healthy at 73.03%, or 86.81% including technical write-offs.

On the growth side, gross advances rose 22% YoY and 7% QoQ. The non-MFI portfolio expanded 21% YoY, led by housing finance, MSE lending and a sharp 180% surge in gold loans. The gold loan book crossed Rs 850 crore during the quarter. Overall deposits grew at a relatively modest 8% YoY.

Capital position remained comfortable, with net worth at Rs 6,125 crore. The bank reported a total capital adequacy ratio (CRAR) of 20.31%, including Tier I at 16.68% and Tier II at 3.63%.

On a full year basis, the bank reported a PAT of Rs 103 crore, down 30% YoY. Net interest income rose 4% YoY to Rs 3,391 crore in FY26.

Looking ahead, the bank is targeting over 20% growth in advances in FY27, driven by traction across product segments, while the share of the MFI portfolio is expected to be maintained at around 10% of overall loans. Credit costs are expected to normalise with a marginal uptick after benefiting from seasonal factors in Q4 FY26. On the operating front, cost-to-income is expected to improve further in the second half of FY27, aided by operating leverage, even as the first quarter may see some pressure due to annual increments. With these levers in place, the bank expects return on assets to improve to around 1.5% by Q4 FY27, with full-year RoA seen at approximately 1.2%.

Equitas Small Finance Bank is one of the largest small finance banks in India.

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