Shares of Equitas Small Finance Bank declined by nearly 5% to ₹65.45 on the NSE as of 9:27 am, following the release of its Q2 FY25 financial results that showed a steep drop in profit due to additional provisions for risky loans.
Key Financial Highlights for Q2 FY25
- Net Profit: The bank reported a net profit of ₹13 crore, a 93% decline from ₹198 crore in the same quarter last year. The drop was mainly attributed to an additional provision of ₹146 crore for stress in its microfinance portfolio, which constitutes around 16% of the total portfolio.
- Operating Profit: Operating profit rose 6% to ₹350 crore, up from ₹330 crore in Q2 FY24.
- Gross NPA: The Gross Non-Performing Assets (NPA) ratio increased by 28 basis points sequentially to 2.95% at the end of September, up from 2.67% three months earlier.
- Net NPA: The Net NPA rose by 16 basis points to 0.97%, compared to 0.81% in the previous quarter.
Additional Comments
Managing Director PN Vasudevan noted, “While the non-microfinance portfolio has grown by 20% year-on-year, we have consciously reduced our lending in the microfinance sector, leading to a 15% growth at the overall bank level.”
Equitas Small Finance Bank’s decision to prioritize provisions for risky assets reflects a cautious approach to managing its loan portfolio amid sectoral challenges, impacting the company’s profitability in the short term.
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