ESAF Small Finance Bank Limited has released the transcript of its earnings conference call held on February 2, 2026, concerning the unaudited standalone financial results for the quarter and nine months ended December 31, 2025. During the call, the management highlighted a significant turnaround in business performance for Q3 FY26, with the bank returning to profitability. This improvement was attributed to a normalization in asset quality, a substantial reduction in Gross NPA (5.6%) and Net NPA (2.7%), and improved operating efficiencies. The bank's total business stood at ₹44,686 crore as of December 31, 2025, marking a 10% year-on-year growth. Gross advances grew by 13% while deposits increased by 7%. The bank has strategically shifted its focus towards secured lending, with secured assets now constituting 63% of gross advances, up from 45% a year ago. The MARG strategy (MSME, Agri, Retail, Gold loans) is central to this shift, aiming for a 70% secured portfolio by March 2027. The bank reported a Profit After Tax (PAT) of ₹7 crore for Q3 FY26. Net interest income increased to ₹432 crore, and the net interest margin improved to 6.6%. Pre-provisioning operating profit saw a significant rise of 171% sequentially and 98% year-on-year. The digital transformation initiative, ESAF 2.0 StratoNeXt, is targeted for go-live in Q2 FY27. Management expects credit costs to normalize by Q1 FY27 and projects a steady-state ROA of 1.5% to 2% by FY28. Loan book growth is projected at approximately 15-16% for FY26 and around 25% for FY27. The transcript also detailed the bank's distribution footprint, comprising 788 banking outlets, 720 ATMs, and 1,042 customer service centers across 24 states and 2 union territories. The microfinance portfolio is showing signs of stabilization with improved collection efficiencies.
