Equitas Small Finance Bank’s gross advances climbed 27% to ₹47,653 crore for the quarter ended June 30, 2026, while total deposits grew 10% to ₹48,976 crore. Investors are monitoring the bank's CASA ratio, which slipped to 25% from 29% a year ago, as the bank faces pressure to manage funding costs in a competitive deposit market.
What Happened
Equitas Small Finance Bank released its provisional business update for the first quarter of the 2027 fiscal year, covering the period ending June 30, 2026. The bank reported that its gross advances reached ₹47,653 crore, representing a 26.70% increase compared to the same period last year. This growth was supported by fresh loan disbursements of approximately ₹6,804 crore during the quarter.
Total deposits at the bank stood at ₹48,976 crore, a 10.44% increase year-on-year. While the bank saw healthy growth in its lending book, the deposit landscape remains a key focus for investors, as banks across the sector compete aggressively to attract funds.
The Loan And Deposit Picture
The bank's loan book showed a diversified growth trend. Microfinance loans grew significantly by 70.19% year-on-year to ₹6,019 crore. Meanwhile, non-microfinance loans, which make up the larger share of the portfolio, increased by 22.19% to ₹41,634 crore. This segment-wise growth indicates the bank's strategy to expand both its traditional micro-lending base and its broader loan offerings.
The CASA Ratio Pressure
A critical metric for bank investors is the Current Account and Savings Account (CASA) ratio, which represents the portion of deposits held in low-cost accounts. The bank's CASA ratio stood at 25% at the end of the quarter, which is a decline from 26% in the previous quarter and 29% a year ago. A falling CASA ratio often forces a bank to rely more on term deposits (fixed deposits), which are generally more expensive. With the cost of funds recorded at 7.05%, maintaining this ratio is vital for the bank to protect its profit margins.
Asset Quality Metrics
In its previous fourth-quarter update, the bank showed improvements in asset quality, an area closely watched by the market. The gross non-performing asset (NPA) ratio, which tracks bad loans, eased to 2.60% from 2.75% sequentially. The net NPA ratio also improved to 0.72% from 0.92% in the prior quarter. These figures suggest that the bank has been able to manage its existing loan book effectively even while expanding its advances.
What Investors May Track Next
Looking ahead, investors will likely focus on the bank's net interest margin (NIM) in the upcoming quarterly results. The margin, which measures the difference between interest earned on loans and interest paid on deposits, will be influenced by the bank's ability to balance its CASA ratio against the rising cost of wholesale deposits. The management's strategy to stabilize or improve the CASA ratio in a high-interest environment will be a key factor to watch, as it directly impacts the bank's long-term profitability.