ESAF Small Finance Bank

ESAF Small Finance Bank reported total business of INR 42,507 crores, up 4.82% year-on-year for the quarter ended June 30, 2025. Deposits grew 8.7% to INR 22,698 crores while gross advances declined to INR 18,224 crores from INR 18,783 crores in the previous year. Net interest income dropped significantly to INR 378 crores from INR 588 crores, with net interest margin compressing to 6% from 9.4% previously. The bank faced asset quality challenges with gross NPA at 7.5% and net NPA at 3.8%, though provision coverage ratio improved to 73.2%. The microfinance loan book declined from INR 13,236 crores to INR 9,095 crores year-on-year, facing pressures particularly in Karnataka and Tamil Nadu. Gold loans emerged as a standout performer, growing 16% quarter-on-quarter and doubling year-on-year, now available in 662 branches. Secured assets increased to 54.79% of the loan book from 32.69% a year ago, with 90% of quarterly disbursements being secured loans. The bank executed NPA sales of INR 733.4 crores during the quarter and raised INR 65 crores through Tier 2 bonds. Management expects stress levels to stabilize in the second quarter with positive traction from the third quarter, targeting 70% secured assets by March 2027 and positive ROA by end of FY26.