MARG portfolio grows 72% YoY, driving improved profitability and asset quality
Kochi | May 1– ESAF Small Finance Bank, a leading scheduled commercial bank headquartered in Thrissur, announced its financial results for the fourth quarter of FY26, marking improved profitability, 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 underscores ESAF Bank’s deliberate and well-calibrated shift from unsecured lending towards a more secured, resilient, and sustainable portfolio.
The Bank reported a net profit of ₹24 crore for Q4 FY26, as against a loss of ₹183 crore in the same quarter last year and a profit of ₹7 crore in the previous quarter. Total business stood at ₹48,276 crore as of 31 March 2026, registering a year-on-year growth of 14.8%. Gross advances grew by 19.4% to ₹22,426 crore, while deposits increased by 11.1% to ₹25,850 crore.
Secured loan disbursements grew by 73.8% year-on-year to ₹10,134 crore during the quarter. Secured assets now constitute 61% of gross advances, up from 53% a year ago, reflecting the Bank’s continued focus on strengthening portfolio quality.
Gold loans emerged as a key growth driver, with the portfolio expanding to ₹8,858 crore, reflecting 54.5% year-on-year growth. In line with the Bank’s calibrated de-risking strategy, the microfinance portfolio moderated from ₹8,857 crore in Q4 FY25 to ₹8,746 crore in Q4 FY26, with its share of gross advances declining from 47% to 39%.
Net Interest Income increased to ₹518 crore from ₹434 crore in the previous quarter. Net Interest Margin improved to 6.4%, supported by a better asset mix, lower slippages, and a reduced cost of funds. Pre-provisioning operating profit rose sharply to ₹241 crore, registering a 166.1% year-on-year growth, while other income increased to ₹201 crore, up 39.2% year-on-year.
Asset quality saw a meaningful improvement, with Gross NPA reducing to 5.4% from 5.6% in the previous quarter, and Net NPA declining to 1.8% from 2.7%. The Bank made provisions of ₹214 crore towards stressed assets. The Capital to Risk-Weighted Assets Ratio (CRAR) remained strong at 22.2%, while the cost of funds stood at 7.1%.
Total deposits grew to ₹25,850 crore, up 11% year-on-year. Retail deposits increased by 9.4% to ₹23,674 crore, accounting for 92% of total deposits. CASA balances rose to ₹6,181 crore, with the CASA ratio at 23.9%.
The Bank added nearly 2.3 lakh new customers during the quarter, taking the total customer base to 102.2 lakh, reflecting strong traction across products and geographies.
Commenting on the performance, Dr. K. Paul Thomas, Managing Director & CEO, ESAF Small Finance Bank, said:“Q4 FY26 reflects a continued strengthening of our business with improved profitability and steady progress in asset quality. The successful execution of our MARG strategy—focusing on MSME, Agri, Retail, and gold lending—has accelerated our shift towards a more secured, granular, and sustainable portfolio. With secured assets now accounting for over 60% of our advances, we are building a resilient balance sheet for long-term growth. We remain confident that this strategic shift, supported by investments in technology, operational efficiency, and risk management, will continue to drive consistent performance while staying true to our mission. With strong business momentum and a clear strategic direction, we are well positioned to deliver sustained, profitable growth in the coming quarters.” The MD & CEO also added that the Bank continues to expand its branch network, having added 16 branches in FY26.
