Equitas SFB falls on Weak Q1, Rising Provisions and Slippages

Equitas Small Finance Bank (SFB) plunged to its 5% lower circuit on Monday after posting a disappointing June quarter, marking its first loss since 2008, due to revised provisioning norms, additional standard asset provisioning in microfinance (MFI), and elevated net slippages. Credit costs rose to 3.2% (QoQ), while gross slippage ratio jumped to 8.3%. The MFI (9% of advances) and small business loans (SBL, 45%) were key drags, though the vehicle finance (VF) portfolio showed resilience with strong growth and quality, driven by used commercial and passenger vehicles. While July saw improved collection efficiency, analysts remain cautious, citing past volatility in recoveries. The bank is proactively building provisioning buffers, which may weigh on near-term profits but support future stability. Credit growth was muted at 8% YoY (18% ex-MFI), with management targeting 15–16% AUM growth in FY26 and a strategic shift toward non-MFI segments.