Short Description: ESAF Small Finance Bank posts a remarkable turnaround, reporting a Q3 net profit of ₹7 crore versus last year’s loss, while significantly improving its asset quality.
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ESAF Small Finance Bank has delivered a dramatic turnaround story in its latest quarterly results, marking a pivotal shift from significant losses to profitability. For the third quarter ended December 31, 2025, the Thrissur-based bank reported a net profit of ₹7 crore, a stark reversal from the substantial net loss of ₹210 crore incurred in the same period last year. This return to profitability is underscored by a notable strengthening of the bank’s balance sheet, including a crucial capital raise of ₹150 crore in Tier II capital during the quarter, bringing the total raised in the nine-month period to ₹265 crore, which bolsters its financial stability.
While the bank celebrated its return to profitability, its Net Interest Income (NII) saw a contraction of 10.6% year-on-year to ₹433 crore. However, the most compelling aspect of the results lies in the significant improvement in asset quality. The bank’s Gross Non-Performing Assets (GNPA) ratio improved sharply to 5.65% from 8.54% in the previous quarter. Similarly, Net NPAs declined to 2.73% from 3.83% sequentially. This improvement was partly facilitated by the strategic sale of non-performing assets (NPAs) totaling ₹1,693.65 crore to asset reconstruction companies during the quarter. On the liability side, the bank’s total deposits grew 7.10% year-on-year to ₹24,006 crore, with a healthy CASA ratio of 25.12%, indicating stable, low-cost funding.
The quarter’s performance was also impacted by a one-time provision of ₹331 lakh related to the implementation of the New Labour Codes. Beyond the financial metrics, ESAF Small Finance Bank demonstrated robust operational growth, expanding its customer base to nearly 1 crore (99.85 lakh) and adding over 5.71 lakh new customers in the year. Its extensive distribution network now spans 788 branches and 1,045 customer service centers across India. The positive market sentiment was reflected in a 1.77% rise in its share price on the results day, signaling investor approval of the bank’s strategic turnaround and improved capital adequacy.
Short Summary: ESAF Small Finance Bank’s Q3 FY26 results highlight a strong turnaround to profitability, driven by a sharp improvement in asset quality through strategic NPA sales and strengthened capital adequacy via a Tier-II raise. While NII saw a dip, robust deposit growth and an expanding customer base position the bank for stabilized future performance, as reflected in positive investor response.
