Increased one-time expenses lead to Equitas Small Finance Bank incurring a loss of ₹224 crore.
Equitas Small Finance Bank has reported a net loss of ₹224 crore in the first quarter of the financial year 2026 (FY26), marking a significant contrast to the profit of ₹26 crore recorded in the same quarter last year. The loss is primarily attributed to one-time additional provisions of ₹330 crore, mainly related to the bank's microfinance portfolio.
The higher provisions in microfinance loans were the main driver for this loss. The bank saw a contraction in its microfinance loan books during the June 2025 quarter. This contraction, coupled with elevated provisions against the microfinance portfolio, reflects heightened credit costs in that segment.
The losses were further compounded by some increase in non-performing assets (NPA) provisions in non-MFI (microfinance) business. However, the bank characterised this NPA rise in Q1 as an outlier, mainly linked to some older accounts; newer loans were performing better.
The net loss was not due to operational losses but mostly to exceptionally high credit costs and provisioning, especially for microfinance loans, and to a lesser extent due to legacy NPAs in other secured segments like vehicle finance and small business loans. The elevated provisions reflect caution against potential defaults in these portfolios amid current market conditions.
In a positive note, the bank's retail banking segment reported a loss after tax of ₹432 crore in the June 2025 quarter, compared to ₹2 crore in the year-ago period. This loss was primarily due to an additional standard asset provision of ₹185 crore in microfinance and ₹145 crore for additional NPA provision.
Despite the losses, the bank's overall deposits registered a 18% y-o-y growth in the same quarter. Interest income increased 9.8% y-o-y to ₹1,649 crore in Q1 FY26. However, the net Interest Income for the June 2025 quarter has not been explicitly mentioned in this report.
The bank's net NPA for the June 2025 quarter was ₹342 crore, a rise from ₹264 crore in the same quarter last year. The change in provisioning norms may have contributed to the bank's financial performance in the June 2025 quarter, but this is not explicitly stated in this report.
The article was published on August 8, 2025.
[1] Equitas Small Finance Bank Q1 FY26 Results - Moneycontrol [2] Equitas Small Finance Bank posts Q1 loss - Business Standard [3] Equitas Small Finance Bank Q1 Results - Livemint [4] Equitas Small Finance Bank posts Q1 loss due to higher provisions - The Hindu BusinessLine [5] Equitas Small Finance Bank Q1 Results - Economic Times
- The reported net loss in Equitas Small Finance Bank's first quarter of FY26 was primarily due to elevated provisions, especially for microfinance loans, and to a lesser extent due to legacy NPAs in other secured segments.
- The loss in the retail banking segment was primarily due to additional standard asset provisions in microfinance and additional NPA provision.
- Despite the losses, the bank's overall deposits registered a 18% y-o-y growth in the same quarter.
- The articles on Equitas Small Finance Bank Q1 FY26 Results from Moneycontrol, Business Standard, Livemint, The Hindu BusinessLine, and Economic Times all reported substantial losses in Q1, primarily due to high provisions in the microfinance portfolio.
