Equitas SFB Q2 FY27 Profit Jumps 803% as Provisions Fall

Equitas Small Finance Bank reported a net profit of Rs 218 crore for the quarter ended September 30, 2026, compared with Rs 24 crore a year earlier. The Q2 FY27 result reflected higher income, stronger pre-provision operating profit and a sharp decline in provisioning. The bank also reported improvement in gross and net non-performing asset ratios. Gross advances and deposits crossed Rs 50,000 crore, marking a significant scale milestone for the lender.

Profit rises from a low year-ago base

Standalone net profit rose 803.4% year-on-year to Rs 218 crore from Rs 24.1 crore in Q2 FY26. Profit was also 18.8% higher than Rs 183.6 crore in the preceding quarter. Profit before tax increased 756.9% year-on-year to Rs 287.4 crore. The effective tax rate stood at 24.1%, compared with 28.0% in the year-ago quarter. Tax expense rose to Rs 69.3 crore from Rs 9.4 crore, in line with the stronger profitability.

Income growth supports quarterly performance

Interest earned increased 27.7% year-on-year to Rs 2,066 crore and was 5.4% higher sequentially. Total income stood at Rs 2,357.5 crore, up 27.7% from a year earlier. Net interest income grew 32.7% to Rs 1,026 crore from Rs 773 crore. Other income was Rs 292 crore, compared with Rs 229 crore in Q2 FY26. The bank also reported Rs 27 crore of income from investments, including dividend income and net of mark-to-market impact.

Operating profit remains substantially higher year-on-year

Pre-provision operating profit was Rs 402.4 crore, up 67.3% from Rs 240.5 crore a year ago. However, it was marginally lower than Rs 404.8 crore in Q1 FY27, a sequential decline of 0.6%. This indicates that the sharp increase in net profit was helped not only by operating income but also by lower credit costs. The bank reported a net margin of 10.6% for the quarter, compared with 1.5% in the year-ago period. It separately reported net interest margin of 6.69%, down 55 basis points quarter-on-quarter.

Lower provisions lift bottom line

Provisions fell to Rs 115 crore in Q2 FY27 from Rs 207 crore in the corresponding quarter of the previous year. They were also lower than Rs 161 crore in Q1 FY27. The quarter included a provision reversal of Rs 84.6 crore related to an asset reconstruction company loan sale. Equitas SFB sold Rs 110 crore of non-performing assets to an asset reconstruction company during the period. Lower provisions were a material contributor to the improvement in profit before tax and net profit.

Asset quality improves sequentially

Gross NPA declined to 2.29% as of September 30, 2026, from 2.42% at the end of June 2026. The ratio was also below 2.92% a year earlier. Net NPA improved marginally to 0.70% from 0.71% in the preceding quarter and 0.98% in Q2 FY26. The decline in impaired-loan ratios, together with reduced provisions, supported the bank's quarterly earnings. These measures remain important for investors assessing the sustainability of the improvement in profitability.

Loans and deposits cross Rs 50,000 crore

Gross advances rose 29.58% year-on-year to Rs 50,694 crore and increased 6.41% quarter-on-quarter. Total deposits grew 19.03% year-on-year to Rs 52,483 crore and were 7% higher sequentially. Overall disbursements were Rs 7,450 crore, up 38% year-on-year and 10% quarter-on-quarter. The CASA ratio was 26% during the quarter. The bank's loan growth exceeded deposit growth on a year-on-year basis, while both balances moved above Rs 50,000 crore.

Capital and liquidity position

Equitas SFB's net worth stood at Rs 6,553 crore at the end of September 2026. Its total capital to risk-weighted assets ratio was 20.92%, comprising Tier I capital of 16.35% and Tier II capital of 4.57%. The liquidity coverage ratio was 173.30%. Capital adequacy improved from 19.44% in the preceding quarter after the bank raised Rs 500 crore of Tier II capital through NCDs listed on September 25, 2026. The bank also said proceeds of Rs 1,500 crore from NCD issues had been fully used for their intended purposes.

Key Q2 FY27 financial metrics

Board decision and outlook markers

The board approved the unaudited financial results for the quarter and half year ended September 30, 2026. It also approved the reappointment of Anil Kumar Sharma as part-time chairman for three years starting April 25, 2027. The bank reported return on assets of 1.31% and return on equity of 13.50% for Q2 FY27. Its next reported performance indicators will be assessed against loan growth, deposit mobilisation, net interest margin, asset quality and credit costs. For now, the Q2 result shows a substantial year-on-year recovery in profit alongside lower provisions and improved NPA ratios.