Equitas Small Finance Bank (EQUITASBNK) Q1 24/25 earnings summary

Executive summary

• Retail term deposits grew 47% year-over-year, with CASA ratio stable at 31% and current account balances up 32% YoY.

• Small business loans rose 27% YoY to over INR 13,700 crores; housing finance grew 35% YoY; used car segment up 59% YoY.

• Net profit for Q1FY25 was ₹26 crore, down 87% YoY, impacted by higher credit costs and floating provisions.

• Microfinance growth was muted at 6% YoY, with disbursements declining 29% YoY and collection efficiency dropping to 98.8%.

• Investments in technology, including new apps and CRM, are progressing well, with strong adoption of the Selfie Loan App.

Financial highlights

• Net interest income for Q1 was INR 801-802 crores, up 8% YoY; other income grew 28% to INR 192 crores.

• Net income grew 11% YoY; PAT for the quarter was INR 26 crores, impacted by a one-time floating provision.

• Credit cost for the quarter was 3.52% due to a ₹180 crore floating provision; excluding this, credit cost was 1.44%.

• Pre-provision operating profit increased 9% YoY to ₹340 crore; total operating expenses rose 13% YoY to ₹654 crore.

• PCR increased to 70.29% from 56.06% sequentially.

Outlook and guidance

• Loan growth guidance for FY25 remains at 25%, despite Q1 growth of 17-18%.

• Credit cost guidance for the full year will be provided after Q2, pending clarity on microfinance trends.

• Cost-to-income ratio expected to remain similar to last year as investments in product initiatives continue.

• Long-term goal is to achieve sustainable ROA of 2.25% and high-teen ROE within 3-4 years.

• Board seeks shareholder approval for capital raise to strengthen Tier-II capital and support growth.