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View Promises →Equitas Small Finance Bank Ltd — Q4 FY26
Equitas Small Finance Bank delivered a strong Q4 FY26 with PAT of ₹213 crore (highest ever, +46% YoY) driven by NIM expansion to 7.29% (+57bps QoQ) and credit cost falling to 1.11% (lowest in 8 quarters).
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2-Minute Summary
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Equitas Small Finance Bank delivered a strong Q4 FY26 with PAT of ₹213 crore (highest ever, +46% YoY) driven by NIM expansion to 7.29% (+57bps QoQ) and credit cost falling to 1.11% (lowest in 8 quarters). Advances grew 22% YoY to ₹46,165 crore, with disbursements at a record ₹7,347 crore. Management guided for FY27 ROA of 1.2-1.25% (Q4 exit ~1.5%), factoring in NIM moderation to ~7% due to deposit rate hikes and seasonal slippage, and credit cost normalization to ~1.5%. Key risk: potential diesel price pass-through could stress the 12% CV portfolio if fuel costs rise >10%.
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Geopolitical tensions and fuel price impact on CV portfolio
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Read Transcript →Quarter Snapshot
Net Interest Margin (NIM)
7.29%
+57bps QoQ
NIM improved for second consecutive quarter, driven by lower income reversals and reduced cost of funds.
Gross NPA
2.49%
-13bps QoQ
Asset quality improved with gross NPA declining sequentially to 2.49%.
Credit Cost
1.11%
-77bps QoQ
Credit cost at 1.11% was the lowest in eight quarters, aided by strong collections.
Disbursements
₹7,347 crore
+72% YoY
Record quarterly disbursements driven by strong momentum across all verticals.
What Changed vs Last Quarter
NEW
Advances growth of 20%+ YoY for FY27
Management reiterated guidance of 20%+ year-on-year growth in advances for FY27, supported by improved disbursements.
NEW
Credit cost to normalize to ~1.5% for FY27
Credit cost expected to rise from Q4's 1.11% to around 1.5% for the full year due to seasonal factors and normalization.
NEW
NIM to stabilize around 7%
Management expects NIM to moderate from 7.29% and stabilize around 7% due to deposit rate hikes and CD ratio management.
UPDATED
FY27 ROA of 1.2-1.25% with Q4 exit at ~1.5%
Full-year ROA guided at 1.2-1.25%, with Q4 FY27 exit ROA expected around 1.5%, factoring in NIM moderation and credit cost normalization.
DROPPED
Advances growth of 15% for FY26 (ex-DA)
Management reiterated 15% YoY advances growth for the full year, excluding the one-time direct assignment purchase.
DROPPED
Cost-to-income ratio to decline to 65% by FY27 exit
The bank expects cost-to-income to improve from ~70% (ex-labor code) to 65% by Q4 FY27 as revenue grows.
NEW RISK
Geopolitical tensions and fuel price impact on CV portfolio
West Asia conflict could lead to diesel price hikes >10%, stressing the 12% CV portfolio due to lag in freight rate adjustment.
NEW RISK
NIM compression from deposit rate hikes
March 2026 rate hikes on savings and term deposits will increase cost of funds, pressuring NIM from Q1 FY27 onwards.
NEW RISK
Seasonal slippage in H1 FY27
Q1 and Q2 are seasonally weak for collections, likely leading to higher GNP slippage and income reversals, impacting NIM and credit cost.
NEW RISK
Potential RBI rate hikes and systemic deposit competition
If RBI raises rates or deposit competition intensifies, cost of funds could rise further, though management believes ability to pass on costs to borrowers.
RISK GONE
Yield compression from rate cuts
Management acknowledged that disbursement yields may decline due to the overall interest rate scenario, which could offset NIM gains from lower cost of funds.
RISK GONE
Elevated cost-to-income ratio
Despite improvement, cost-to-income remains high at 72% (70% ex-labor code), and management expects it to decline only gradually to 65% by FY27 exit.
RISK GONE
Capital adequacy pressure from growth
An analyst raised concerns about capital adequacy; management plans to conserve capital via IBPC, CGTMSE, and gold loans, but may need to raise capital in H2 FY27.
RISK GONE
Geographic concentration in South India
An analyst noted that ~62% of advances are in South India; management plans to reduce Tamil Nadu exposure from 44% to 36% over 3-4 years, but near-term concentration risk remains.
🤫 Topics management stopped discussing
Mentioned in Q1 FY26, Q3 FY26
The bank expects cost-to-income to improve from ~70% (ex-labor code) to 65% by Q4 FY27 as revenue grows.
Fast read
Guidance and risk preview
Management reiterated guidance of 20%+ year-on-year growth in advances for FY27, supported by improved disbursements.
West Asia conflict could lead to diesel price hikes >10%, stressing the 12% CV portfolio due to lag in freight rate adjustment.
View Risks →