SFBs' Q1 Net Slumps 76% as Credit Costs Mount

Rising stress, mostly in small-ticket loans and micro, small and medium enterprises (MSMEs), hit the bottom line of small finance banks (SFBs) during the first quarter of this financial year (Q1FY26).

- ABHIJIT LELE

Net profit fell 76.2 per cent year-on-year (Y-o-Y) to ₹309 crore in the June quarter due to a sharp rise in stress-loan provisions (credit costs) and erosion in net interest income. These banks had posted a net profit of ₹1,300 crore a year ago (Q1FY25).

Sequentially, net profit shrank by 46.1 per cent over ₹573 crore in the quarter ended March 2025 (Q4FY25), according to data compiled by BS Research Bureau for eight listed SFBs. The operating profits were down 8.5 per cent Y-o-Y to ₹2,662 crore and 0.4 per cent sequentially from ₹2,674 crore.