Equitas Small Finance Bank (EQUITASBNK) investor relations material

Executive summary

• Gross advances rose 30% YoY to ₹50,669 crore and deposits rose 19% to ₹52,483 crore; total business exceeded ₹1 lakh crore.

• Q2 PAT reached a record ₹21,803.97 lakh (₹218 crore), versus ₹2,413.53 lakh a year earlier; H1 PAT was ₹40,164.66 lakh versus a loss of ₹19,962.80 lakh.

• Asset quality improved QoQ, with GNPA at 2.29% and NNPA at 0.70%.

Financial highlights

• Net income rose 32% YoY to ₹1,313 crore; NII was ₹1,026 crore, while other income was ₹287 crore.

• Q2 PBT was ₹28,738.39 lakh versus ₹3,353.81 lakh a year earlier; operating expenses rose 20% YoY to ₹911 crore.

• Reported credit cost was 0.94%, versus 1.37% in Q1; excluding the ARC transaction it was 1.12%.

• The ₹110 crore NPA sale to an ARC generated ₹22.5 crore net income in other income; excess provision of ₹8,462.52 lakh was reversed following the sale.

• Operating expenses included a one-time ₹29.52 crore provision related to the new labour code.

Outlook and guidance

• FY27 advances growth guidance rose to 25%+; FY27 ROA guidance increased to ~1.35%, with a Q4 exit target of ~1.5%.

• Excess liquidity is expected to be mostly deployed in Q3, with full recovery reflected by Q4; NIM improvement of 18–20 bps from Q2's 6.69% is expected by Q4.

• Cost of funds is expected to rise 8–10 bps over the next two quarters, mainly as maturing deposits reprice; no further deposit-rate increase is currently planned.

• Medium-term NIM ambition is ~7% over two years; operating leverage is expected to moderate cost-to-income in H2, while credit costs are expected to normalize.