The bank reported its highest ever quarterly net profit of INR 236 crores, a 29% year-on-year (YoY) increase. This marks the fifth consecutive quarter of record profits.
Return on Assets (ROA) stood at 1.03% for the quarter and 1.0% for the half year. Return on Equity (ROE) was 14.6% for the quarter and 14.12% for the half year.
Net Interest Income (NII) grew by 17% YoY.
Total revenue grew by 21% YoY, supported by strong core fee income.
Advances grew by 21% YoY and deposits grew by 19% YoY. The bank's balance sheet has doubled in size over the past four years (since September 2022).
The cost-to-income ratio improved to 59.64%, an 18-quarter low. The cost to average assets was contained at 2.47%.
Asset Quality and Provisions
Gross Non-Performing Assets (GNPA) improved to 2.29%, a 23-quarter low.
Net Non-Performing Assets (NNPA) improved to 0.73%, also a 23-quarter low.
Provision Coverage Ratio (PCR) stood at 81.38%, a 7.23% improvement YoY. PCR excluding technical write-offs was 68.75%, a 9.6% improvement YoY.
Credit cost for the quarter was 0.28%.
The bank holds INR 218 crores in floating provisions, which were started in 2015 and never utilized.
NIM, Yield, and Cost of Funds
The Net Interest Margin (NIM) for the quarter was 3.3%.
Yield on advances dropped by 38 basis points (bps) over the last year, while the cost of funds was reduced by 34 bps during the same period.
Sequentially (QoQ), yield on advances dropped by 2 bps and the cost of funds dropped by 8 bps.
The QoQ NIM compression was attributed to a conscious strategy of stockpiling liquidity post the February 2026 Israel-Iran war and availing of a lower-cost NRI deposit (FCNR-B) window in August 2026, which added $194 million but carried a liquidity cost.
Management expects NIM to improve in Q3 and Q4 due to reduced surplus liquidity and the passing on of recent repo rate hikes to floating-rate asset customers.
Business Growth and Strategy
Employee strength stood at 12,002, a 1% increase over the last two years, during which the balance sheet grew 34% and revenue grew 33%.
The branch expansion strategy focuses on adding people to existing branches rather than opening new locations. The target is to add approximately 20 branches for the full year.
The gold loan book constitutes 23% of total assets, and the bank is comfortable taking this to a maximum of 25%. 30% of the gold book is organic, while 70% is inorganic (a mix of co-lending and Direct Assignment (DA)).
The bank is focusing on growing its corporate loan book, particularly exposure to NBFCs, from the current level of less than 8% to a target of 10% of the asset book.
The product mix for secured retail loans (LAP vs. Home Loan) is maintained at approximately 70:30 on an incremental basis.
Management acknowledged efforts are ongoing in cross-selling and bancassurance, but significant results are expected over the next 12-18 months.
Capital Raise
Management confirmed that a capital raise is in advanced stages and a "firm offer" or the capital itself is expected to come in before the next investor call (likely by end of January 2027).
The bank has not raised capital since 2017 and is not desperate, as the Capital Adequacy Ratio as of September 30, 2026, is better than in March 2026 despite growth.
It was explicitly stated that capital will not be raised below the current book value. The exact price-to-book valuation is under negotiation.
Asset Quality & ECL Implementation
Slippage ratios were noted at 1.55% for non-gold and were higher for the gold loan book, which management attributed to the collection practices of some co-lending/DA partners rather than a fundamental credit issue. The absolute gold NPA is INR 26 crores on a ~INR 14,000 crore book.
A Big 4 consultant has been appointed to implement the Expected Credit Loss (ECL) model, with confidence it will be operational by March 2027. Lead indicators are positive, and the focus is on reducing SMA-1 and SMA-2 buckets to gain benefits under ECL.
Other Key Points
The bank's agri book (~8-9% of total, including tractor, KCC, and MFI loans) is performing well with no immediate impact seen from regional droughts or El Nino concerns.
Early trends, including bounce rates and rejection rates, across products like mortgage and LAP remain stable and encouraging, with no signs of borrower stress or dilution of underwriting standards.
