This article first appeared on GuruFocus .
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Gross Advances:INR9,074 crore, 22% year-on-year growth.
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Total Deposits:INR10,596 crore, 16% year-on-year growth.
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CASA Ratio:Improved to 36.7% from 34.7% in March 2026.
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Disbursements:INR1,009 crore, 17% year-on-year growth.
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Gross NPA:2.47%, improved by 28 basis points year-on-year.
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Net NPA:1.14%, improved from 1.24% in the previous quarter.
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Net Interest Margin:4.21%, up from 4.06% a year ago.
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Profit After Tax:INR41.3 crore, 29% year-on-year increase.
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Return on Assets:1.3%, up from 1.18% in Q1 FY26.
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Capital Adequacy Ratio:21.6%.
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Branch Network:Expanded to 116 branches.
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Cost of Deposits:5.6%, down from 5.8% in the previous quarter.
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Pre-Provision Operating Profit:INR64.7 crore, 23.1% year-on-year increase.
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Book Value per Share:INR327.
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Earnings Per Share (EPS):INR36.4 annualized.
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Release Date: July 24, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Capital Small Finance Bank Ltd ( NSE:CAPITALSFB ) reported a 22% year-on-year growth in gross advances, reaching INR9,074 crore, driven by strong performance in the MSME and business loan segments.
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The bank's total deposits grew by 16% year-on-year to INR10,596 crore, with an improvement in the CASA ratio to 36.7% from 34.7% in March 2026.
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Net interest margin improved to 4.21% from 4.06% in the previous quarter, supported by a decline in deposit costs and an increase in the credit-to-deposit ratio.
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Profit after tax increased by 29% year-on-year to INR41.3 crore, with a return on assets of 1.3%, up from 1.18% in Q1 FY26.
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The bank's capital adequacy ratio stood at a robust 21.6%, providing sufficient headroom for future growth.
Negative Points
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Gross NPA remained relatively high at 4.47%, although there was a slight improvement in net NPA to 1.14%.
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The provision coverage ratio increased, indicating a cautious approach towards potential loan defaults, which could impact profitability.
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The cost-to-income ratio remained high at 59.5%, suggesting room for improvement in operational efficiency.
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There was a slight increase in SMA-2 accounts to 3.11%, indicating some stress in the loan portfolio.
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Non-interest income growth was modest at 13% year-on-year, which may limit overall revenue diversification.
Q & A Highlights
Q: Can you provide the growth split for MSME between Haryana and Punjab? A: Munish Jain, Executive Director, explained that the MSME growth is well split between Punjab and Haryana, with both regions showing similar growth levels. The overall advances outside Punjab have increased to 25%, up from 24% a quarter ago and 21% a year ago.
Q: Why has the provision coverage ratio been increasing recently? A: Munish Jain stated that the bank aims to bring the net NPA towards 1% in the medium term. The increase in provision coverage ratio is a strategic move to achieve this target, and most of the necessary actions have already been taken.
Q: How do you plan to maintain the NIM at 4.2% given the pressure on deposit costs? A: Munish Jain mentioned that the bank expects some benefit from repricing INR1,600 crore of term deposits in Q2, which will counterbalance the increasing cost of deposits. The bank's balance sheet is well-positioned to maintain NIM stability.
Q: What is the outlook for MSME growth and overall growth for FY27? A: Munish Jain expressed confidence in achieving the 22% growth target for FY27 and the INR16,000 crore loan book target by FY29. The bank has seen consistent traction in MSME growth over the past quarters and expects this momentum to continue.
Q: Why do agriculture loans have a higher yield compared to other segments? A: Munish Jain explained that agriculture loans are priced higher due to perceived risks such as climatic conditions. The bank targets middle-income farmers with loans ranging from INR5 lakhs to INR35 lakhs, ensuring collateralization with an LTV of 50%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
