KOCHI: ESAF Small Finance Bank ended FY25 with a net loss of Rs521 crore, marking a sharp reversal from a net profit of Rs426 crore in the previous fiscal.
This came as ESAF remained under stress for the third straight quarter, with rising delinquencies in its microfinance loan book weighing heavily on its earnings.
For the fourth quarter alone, the bank posted a loss of Rs183 crore, following losses of Rs211 crore and Rs190 crore in the previous two quarters.
The pressure on asset quality led to a 68 per cent drop in pre-provision operating profit, which fell to Rs91 crore from Rs285 crore a year earlier. Total income declined 10 per cent to Rs1,037 crore, while expenses rose 9 per cent to Rs946 crore.
The bank’s asset quality deteriorated further, with gross non-performing assets (GNPA) rising to 6.87 per cent as of March 2025, up from 4.76 per cent a year ago, though slightly lower than 6.96 per cent in the previous quarter.
ESAF made provisions of Rs332 crore in Q4 FY25, including Rs131 crore over and above regulatory norms.
NII falls
Net interest income (NII) fell to Rs436 crore from Rs591 crore in the same quarter last year, impacted by the stress in the microlending portfolio. However, the net interest margin held steady at 8.08 per cent.
Despite the challenging year, ESAF Bank accelerated its pivot towards secured lending. Disbursements under secured loans surged to Rs5,832 crore in Q4 FY25 from Rs2,187 crore a year earlier, raising the share of secured loans in the total portfolio to 52.84 per cent from 29.98 per cent.
The gold loan segment led this growth, nearly doubling to Rs5,734 crore in FY25 from Rs2,889 crore in the previous year.
“Our performance in FY25 reflects the early success of our transition towards secured and retail asset-led growth,” said K. Paul Thomas, MD & CEO. “We remain focused on expanding our gold and secured loan portfolio, while strengthening our CASA base.”
The bank’s capital adequacy ratio stood strong at 21.84 per cent, well above the regulatory requirement.
