Net interest income fell 4% YoY to Rs 774 crore, compared with Rs 802 crore in Q2 FY25, and declined 2% sequentially from Rs 786 crore in Q1 FY26. Pre-tax profit (PBT), however, jumped 63% YoY to Rs 34 crore, reversing a loss of Rs 297 crore in Q1 FY26.

The bank’s total operating expenditure rose 11% YoY to Rs 757 crore, remaining flat sequentially. Employee costs increased 18% YoY to Rs 474 crore, while operating expenses were up 2% YoY to Rs 283 crore.

PBT before provision and write-offs stood at Rs 241 crore, down 31% YoY and 24% QoQ, impacted by higher operating costs. However, credit cost dropped sharply to Rs 207 crore, improving 66% QoQ from Rs 612 crore in Q1 FY26, and 37% YoY from Rs 330 crore.

On the business front, gross advances grew by 4% QoQ & 9% YoY supported by increase in disbursements, particularly MFI. Disbursements in MFI grew by 156% QoQ. The non-microfinance book expanded 17% YoY, supported by 17% growth in small business loans (SBL), which crossed Rs 17,000 crore. The used car advances portfolio grew 43% YoY to Rs 2,100 crore, while used commercial vehicle loans rose 25% YoY to Rs 5,000 crore.

Overall deposits grew by 11% YoY & flat QoQ. The CASA ratio remained stable at 31%, while retail term deposits rose 11% YoY to Rs 19,272 crore. The cost-to-income ratio stood at 75.9% in Q2 FY26, higher than 70.6% in Q1 FY26 and 66.1% in Q2 FY25.

Asset quality remained stable, with gross NPA steady at 2.82% and net NPA at 0.95%, similar to Q1 levels. The credit cost ratio improved sharply to 2.16%, compared to 6.48% in Q1 FY26 and 3.72% in Q2 FY25. Net Slippages improved by about 1% QoQ to 3.78% in Q2FY26 as compared to 4.77% in Q1FY26.

The bank reported a net worth of Rs 5,858 crore, and capital adequacy ratio (CRAR) of 20.74%, comprising Tier I capital at 16.44% and Tier II at 4.30%, well above regulatory requirements. Liquidity remained robust, with the Liquidity Coverage Ratio (LCR) at 184.4%.

Treasury & PSLC fee income for the quarter stood at Rs 34 crore, down 27% YoY and down 72% QoQ. The bank’s certificate of deposit (CD) programme continued to hold the highest rating of A1+ from India Ratings, CareEdge, and CRISIL.

Equitas Small Finance Bank is one of the largest small finance banks in India.