ESAF Small Finance Bank reported a 24.34% YoY rise in total deposits to ₹28,466 crore and a 25.05% jump in gross advances for the quarter ended September 2026. The bank performed a technical write-off of ₹625 crore in NPAs, which impacted headline growth figures. While business volume shows strong momentum, investors should note the declining CASA ratio of 23.34% and the implications of significant asset write-offs on the bank's balance sheet.
ESAF Small Finance Bank Q2 Business Update Highlights
Total Deposits rose 24.34% to ₹28,466 crore; Gross Advances grew 25.05% to ₹23,931 crore.
Reader Takeaway: Robust core business growth is offset by a lower CASA ratio and significant asset quality cleanup measures.
What just happened
ESAF Small Finance Bank released its provisional business updates for the quarter ended September 30, 2026. The bank reported total business (including IBPC) of ₹53,447 crore. Growth remains strong across key portfolios, although management utilized a technical write-off of ₹625 crore for Non-Performing Assets (NPAs) during the period.
Why this matters
The write-off is a critical detail for investors. While the bank grew its loan book by 25.05% YoY, management clarified that excluding this technical adjustment, the growth would have reached 28.32%. This highlights the bank's proactive stance in managing its asset quality, though it raises questions about underlying loan recovery and credit risk profiles in their portfolio.
Deposits and CASA
Total deposits reached ₹28,466 crore, driven largely by a 29.52% surge in Term Deposits to ₹21,821 crore. However, the CASA (Current Account Savings Account) ratio dropped to 23.34% from 26.41% a year ago. A shift from low-cost CASA funds to higher-cost term deposits can exert pressure on the Net Interest Margins (NIM) in subsequent quarters.
Advances and Strategy
The bank is focusing on high-growth areas, with its MARG segment (MSME, Agri, Retail, and Gold Loans) expanding by 38% to ₹13,938 crore. The share of secured advances has also improved to 65.19%, suggesting a strategic push toward safer lending products compared to the 61.20% level seen in September 2025.
Risks to watch
The decline in the CASA ratio is the primary margin headwind. Additionally, investors should monitor how the recent ₹625 crore technical write-off influences future provision requirements and capital adequacy ratios when the full financial results are disclosed.
What to track next
Watch for the upcoming detailed financial report to assess the impact of this write-off on net profit margins and whether the deposit mix stabilizes in the next quarter.