Returning to profitability, ESAF Small Finance Bank, a leading scheduled commercial bank headquartered in Thrissur on January 30, reported a net profit of ₹7 crore for Q3 FY26, as against a loss of ₹211 crore in the same quarter last year.
Total business stood at ₹44,686 crore, registering a year-on-year growth of 10%. While gross advances grew by 13.1% to ₹20,679 crore. Deposits increased by 7.1% to ₹24,006 crore. Secured loan disbursements surged by 149% year-on-year to ₹10,530 crore during the quarter.
Bouncing back to black, the bank registered strong growth in its MARG portfolio, and a significant improvement in asset quality. A key milestone in the Bank’s transformation journey has been the successful execution of its MARG strategy— representing MSME, Agri, Retail and Gold loans—which underlines ESAF Bank’s deliberate and well-calibrated shift from unsecured lending towards a more secured, resilient, and sustainable portfolio.
Secured assets now constitute 63% of gross advances, up from 45% a year ago, validating the bank’s strategic focus on building a more resilient and better-quality portfolio. The bank remains on track to achieve its 70% secured portfolio target by March 2027.
Gold loans emerged as the key growth driver, with the portfolio expanding to ₹8,669 crore, reflecting 89% year-on-year growth and 16% quarter-on-quarter growth. In line with the bank’s calibrated de-risking strategy, the microfinance portfolio declined from ₹10,000 crore in Q3 FY25 to ₹7,583 crore in Q3 FY26, reducing its share of total advances from 55% to 37%.
Net Interest Income rose to ₹432 crore, up from ₹372 crore in the previous quarter. Net Interest Margin improved to 6.5%, driven by a better asset mix and lower cost of funds.
Asset quality saw a meaningful turnaround during the quarter, with Gross NPA reducing to 5.6% from 8.5% in the previous quarter and Net NPA declining to 2.7% from 3.8%. The bBank made provisions of ₹243 crore towards stressed assets. The Capital to RiskWeighted Assets Ratio (CRAR) remained strong at 22.7%, while the cost of funds stood at 7.3%.
K Paul Thomas, Managing Director & CEO, ESAF Small Finance Bank, said: “Q3 FY26 marks a strong turnaround for ESAF, driven by the successful execution of our MARG strategy—focusing on MSME, Agri, Retail and Gold lending. The sharp improvement in asset quality and return to profitability clearly validates our shift towards a more secure, granular and sustainable portfolio. With secured assets now accounting for 63% of our advances and witnessing strong traction, we are building a resilient balance sheet for long-term growth. Our continued investments in technology, operational efficiency and risk management position us well to deliver consistent performance while staying true to our inclusive banking mission.”
Bank added nearly 2 lakh new customers during the quarter, taking the total customer base to 99.9 lakh, reflecting strong traction across products and geographies.