SFBs' Q2 profit plunged 55% on rising credit cost

Erosion in net interest income (NII) and rising credit costs from stressed assets hurt the small finance banks (SFBs) in the second quarter of the financial year (Q2 FY26).

- ABHIJIT LELE

They made a net profit of 383 crore, down by over 55 per cent from ₹854 crore in Q2 FY25.

The lenders, however, sequentially clocked a 23.9 per cent growth in net profit, compared to 309 crore in Q1 FY26, according to the data compiled by BS Research Bureau for listed eight SFBs.

Their operating profit in Q2FY25 was down 15.6 per cent to 2,344 crore compared to the previous year and declined 12.0 per cent sequentially from ₹2,662 crore in Q1 FY26.

Provisions and contingencies — predominantly credit cost — increased 11.8 per cent to ₹1,881 crore and declined sequentially by 17.6 percent from ₹2,282 crore in Q1 FY26.