Increased one-time payments contribute to Equitas Small Finance Bank's loss reached ₹224 crore
On August 8, 2025, the private sector bank disclosed its financial results for the June 2025 quarter, revealing a contraction in its microfinance loan books and increased losses.
Gross advances in the microfinance loan books contracted during the quarter, while growth was observed in the non-microfinance loan books. The bank reported a net loss of ₹432 crore in the retail banking segment for the June 2025 quarter, compared to ₹2 crore in the year-ago period.
The net NPA for the June 2025 quarter stood at ₹342 crore, up from ₹264 crore in the previous quarter. This increase was primarily due to higher provisions in the microfinance portfolio and a one-time provisioning hit to buffer future stress.
Equitas Small Finance Bank, another financial institution, also reported a net loss of ₹224 crore in Q1 FY26. The elevated provisioning was driven by concerns around asset quality, especially in the microfinance segment, despite signs of recovery in collections.
The loss was attributed to higher provisions on non-performing assets (NPAs) in the microfinance portfolio, elevated NPAs in some non-microfinance secured lending portfolios such as small business loans and vehicle finance, and a one-time provision charge.
The one-time provision charge was taken to strengthen the bank's buffer against asset quality stress in both microfinance and non-microfinance portfolios. The bank's overall deposits registered a 18% year-on-year growth in the same quarter.
Interestingly, the non-microfinance loan books experienced a growth of 18% in the same quarter. The loss was due to an additional standard asset provision of ₹185 crore in microfinance and ₹145 crore for additional non-performing assets (NPA) provision.
Despite these losses, the private sector bank reported an 8% year-on-year growth in Net Interest Income for the quarter, and a 9.8% increase in interest income to ₹1,649 crore compared to the year-ago period.
- The bank's financial results for the June 2025 quarter showed a contraction in both microfinance and non-microfinance loan books, with the latter experiencing growth.
- The private sector bank disclosed a net loss in the retail banking segment for the June 2025 quarter, which was attributed to higher provisions on non-performing assets, particularly in the microfinance portfolio.
- The increase in the bank's net NPA for the June 2025 quarter was primarily due to higher provisions in the microfinance portfolio and a one-time provisioning hit to buffer future stress.
- In addition to the microfinance portfolio, the bank also made additional provision for non-performing assets in some non-microfinance secured lending portfolios such as small business loans and vehicle finance.
