Equitas Small Finance Bank Reports Strong Q4 FY26 Business Update

Equitas Small Finance Bank has released its provisional business update for the quarter and year ended March 31, 2026, showing significant growth in its loan book and customer deposits.

Lending and Deposits Grow

The bank's Gross Advances reached ₹46,183 crore, marking a substantial 21.58% year-on-year increase. This growth was also evident on a quarterly basis, with advances rising by 6.74% from the previous quarter.

Total Deposits climbed 7.96% year-on-year to ₹46,533 crore as of March 31, 2026. Quarter-on-quarter, total deposits saw a 6.56% rise.

Asset Quality and CASA Focus

Key asset quality indicators showed positive trends. The delinquency rate for Microfinance loans (1-90 days past due) stood at 1.43%, and overall collection efficiency for the X-bucket was 99.77%, reflecting effective risk management.

However, the bank observed a year-on-year decline in Current and Savings Account (CASA) deposits, which fell to ₹12,198 crore. This resulted in a lower CASA ratio, an area management will need to focus on to manage the bank's cost of funds effectively.

Bank Background and Performance

Equitas Small Finance Bank, established in 2016 from Equitas Microfinance Ltd., serves customers across 18 states and Union Territories through over 1,040 branches. It offers a range of financial products including microfinance, small business loans, vehicle finance, and housing finance.

The bank has a track record of consistent growth, with Gross Advances and Deposits showing robust compound annual growth rates of 23% and 32% respectively over the three years ending FY25.

Regulatory History and Risks

In January 2025, Equitas SFB was fined ₹65 lakh by the Reserve Bank of India for non-compliance with foreclosure charges and agricultural loan norms, highlighting the importance of adhering strictly to regulatory guidelines.

Investors should note that these figures are provisional and subject to audit. Loan figures may also be subject to change due to potential write-offs.

Peer Comparison

Equitas SFB operates in a competitive environment alongside banks like AU Small Finance Bank and Ujjivan Small Finance Bank. For context, AU Small Finance Bank reported a 26.3% year-on-year profit increase in Q3 FY26, while Ujjivan Small Finance Bank maintained a CASA ratio of 27.30% as of December 2025.

Key Metrics and Outlook

The bank's Credit-Deposit Ratio was 93.69% as of March 31, 2026. The daily average Cost of Funds stood at 6.93% on the same date.

Moving forward, investors will be watching how Equitas SFB plans to bolster its CASA ratio and low-cost deposit base, alongside continued performance in asset quality metrics. Management commentary on future growth drivers and liability management will also be key.