Jana Small Finance Bank Limited — Q1 FY27 earnings call

Call held 15 Jul 2026

Management summary

Jana Small Finance Bank reported a strong Q1 FY27 with a profit after tax of INR155 crore, driven by an improved Net Interest Margin (NIM) of 7.5% and a 50 basis points year-on-year reduction in the cost of funds. Asset quality showed significant improvement with slippages reducing by almost 20% quarter-on-quarter and net NPA at 0.85%. The bank also saw robust retail deposit growth of 30.7% year-on-year and CASA growth of 7.1% quarter-on-quarter, contributing to a healthy ROA of 1.4% and ROE of 13.6%.

Highlights

  • PAT of INR155 crore, indicating strong profitability.

  • NIM backed up to 7.5%, driven by a 50 basis points YoY decline in cost of funds.

  • Asset quality improved significantly with gross NPA at 2.24% and net NPA at 0.85%.

  • Slippages reduced by almost 20% quarter-on-quarter.

  • Robust CASA growth of 31% YoY and 7.1% QoQ, strengthening the deposit franchise.

  • ROA at 1.4% and ROE at 13.6%, reflecting a return to normalized performance.

Concerns

  • Slight increase in overall SMA noted in Q1 FY27.

  • Micro LAP segment experienced a temporary blip in growth due to model amendments.

  • Deposit prices hardened in April and May, necessitating an increase in deposit rates in June.

Key financials

  1. PAT ₹155 Cr
  2. NIM 7.5%
  3. Gross NPA 2.2%
  4. Net NPA 0.85%
  5. ROA 1.4%
  6. ROE 13.6%
  7. CASA Growth 31% +7.1%QoQ
  8. Credit Cost 0.45%
  9. Cost-to-Income Ratio 66.7%

What they filed

Q1 FY27: revenue up 22.1%, net profit up 52.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,166 1,177 1,184 1,241 1,305 +12%1,374 +17%1,445 +22%1,515 +22%
Net profit97 111 123 102 75 −23%10 −91%140 +14%155 +52%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • MFI
    2.8% Growth18% Growth₹10,240 Cr Book Value

Guidance & targets

Volume

  • Gross Loan Growth Volume · FY27 · High confidence 19% to 21%
    Finally, I just want to finish with Page number 23 and reiterate our guidance of gross loan growth of 19% to 21%, a deposit growth of 23% to 25%, and a PAT of 80% plus for the year.

    — Ajay Kanwal

  • Deposit Growth Volume · FY27 · High confidence 23% to 25%

    — Ajay Kanwal

  • MFI Growth Volume · FY27 · High confidence 10% to 12%
    For FY27, we are targeting the portfolio not to be aggressively growing, to about 10% to 12%.

    — K.S. Raman

Profitability

  • PAT Profitability · FY27 · High confidence 80% plus
    Finally, I just want to finish with Page number 23 and reiterate our guidance of gross loan growth of 19% to 21%, a deposit growth of 23% to 25%, and a PAT of 80% plus for the year.

    — Ajay Kanwal

  • Credit Cost Profitability · remaining quarters of FY27 · High confidence 0.45%
    So one can expect that the 0.45% cost will at the minimum be maintained at the same levels in all the remaining quarters.

    — Ajay Kanwal

Margin

  • Cost of Funds Margin · FY27 · High confidence 7.3% to 7.4% range
    It will remain around 7.3% to 7.4% range.

    — Abhilash Sandur

Deposit Mix

  • CASA Mix Deposit Mix · FY27 · High confidence around 20%
    We want to have a CASA mix of close to around 20%, CASA ratio, for the year.

    — Abhilash Sandur

Efficiency

  • Cost-to-Income Ratio Efficiency · FY27 · High confidence 63% to 65% range
    It will go around 63% to 65% range during the year.

    — Abhilash Sandur

What to watch in Q2 FY27

Micro LAP growth

Second quarter onwards
Current Negative growth in Q1 FY27
Target Positive growth rate

Why it matters

Indicates recovery and growth in a segment that faced a temporary blip due to model changes, crucial for overall loan book expansion.

The one business which wasn't designed to not grow in the first quarter, which is Micro LAP... we will bring it to the positive growth rate second quarter onwards.

Risks & concerns

  • Hardening deposit prices and tight liquidity

    medium

    Deposit prices increased in April and May, leading the bank to raise its deposit rates in June to manage liquidity.

    I think April and May were a bit difficult months from a liquidity perspective. Prices went up on the deposit side, which we try to kind of hold against. But now we've kind of decided, in June, we've kind of increased our deposit rates.

    Management acknowledged

  • Holding company rating downgrade

    low

    The downgrade was a technical default for the holding company, not impacting the bank directly; no common board members or cross-default linkage.

    However, India ratings felt that since they had to downgrade the JHL and JCL rating, which fundamentally was a technical default to our minds because the NCD holders wanted more time to sell the shares and they've asked for 6 more months... We have seen both our share price and our business, and we find that our investors and clients have understood it. We are very thankful to both, and it is BAU for us.

    Management downplayed

  • Micro LAP growth blip

    low

    The Micro LAP business experienced a temporary slowdown in Q1 FY27 due to a strategic amendment of its model towards direct sourcing.

    The one business which wasn't designed to not grow in the first quarter, which is Micro LAP. We have been slowly trying to amend the model more towards direct sourcing. It causes a blip in the quarter. So that's something that we are working on, and we will bring it to the positive growth rate second quarter onwards.

    Management acknowledged, working on it

Q&A highlights

6 direct, 1 evasive
Unsecured slippages trend and sustainability Direct
So in terms of unsecured slippages, quarter-on-quarter, it has reduced by almost 20%. And so that is expected to continue on the downward trajectory.

Provides insight into improving asset quality in a key segment and future outlook for slippages.

Asked by Jai Chauhan

Credit cost outlook for FY27 Direct
So one can expect that the 0.45% cost will at the minimum be maintained at the same levels in all the remaining quarters.

Sets clear expectations for future provisioning and profitability, indicating stability in credit costs.

Asked by Jai Chauhan

Emerging stress in MSME, Micro LAP, affordable housing segments Direct
Nothing. See, listen Micro LAP, like I mentioned, we are trying to move more towards direct or rather percentage of direct contribution in the business needs to go up, which is why we had blip in growth. It had nothing to do with performance of the book. Affordable is doing absolutely fine. MSME is doing fine.

Reassures on the health of key growth segments despite a temporary blip in Micro LAP due to model changes.

Asked by Jai Chauhan

Gold loan portfolio growth and asset quality amidst price correction Direct
on an average, across the portfolio, our LTV is 64%, to be precise, which is well within the regulatory limits... Therefore, we don't expect any material impact on asset quality. GNPA will remain around 0.5% and will be fully covered by the collateral realization.

Addresses concerns about gold price volatility and confirms robust risk management practices for the gold loan portfolio.

Asked by Pranav

Bank merger rumors Evasive
Listen, no comment on market speculation.

Management's refusal to comment on merger speculation leaves uncertainty for investors regarding potential strategic changes.

Asked by Gulshan Singh

CASA growth sustainability and FY27 target Direct
We want to have a CASA mix of close to around 20%, CASA ratio, for the year.

Provides a specific target for a crucial funding metric, indicating the bank's focus on improving its low-cost deposit base.

Asked by Gulshan Singh

Return of government deposits after account losses Partial
No. The government deposits, which were CASA-led, haven't come back. However, I must add that particular state government has issued empanelment list of banks, our name is very much there in that list. So I do expect that we should start getting the business again.

Clarifies that previously lost government deposits have not yet returned but indicates potential for future recovery as the bank is back on the empanelment list.

Asked by Gulshan Singh

Explanation of unsecured NPA and guarantee cover (Slide 10) Direct
our NNPA, if you see is INR214 crore, against which the covered portion, which is a guaranteed portion, is INR196 crore.

Provides clarity on the coverage for unsecured NPAs, detailing the extent of guaranteed portions and potential future claims.

Asked by Harshit

2 min read 7 chapters

Detailed narrative

Q1 FY27 Financial Performance Overview

Jana Small Finance Bank reported a strong Q1 FY27 with a Profit After Tax (PAT) of INR155 crore. The Net Interest Margin (NIM) improved to 7.5%, supported by a 50 basis points year-on-year decline in the cost of funds. The bank achieved a Return on Assets (ROA) of 1.4% and a Return on Equity (ROE) of 13.6%, indicating a return to normalized profitability levels.

Asset Quality and Credit Cost

The bank demonstrated significant improvement in asset quality, with gross NPA reducing to 2.24% and net NPA at 0.85% of the gross loan book. Slippages in the unsecured portfolio decreased by almost 20% quarter-on-quarter, from INR155 crore to INR125 crore, and the credit cost remained flat at 0.45% compared to the previous quarter. Management expects credit cost to be maintained at this level for the remaining quarters of FY27.

Deposit Franchise and Funding

Retail term deposits grew strongly by 30.7% year-on-year and 2.3% quarter-on-quarter, while CASA growth was robust at 31% year-on-year and 7.1% quarter-on-quarter. Despite some hardening of deposit prices in April and May, the bank adjusted rates in June, expecting the cost of funds to stabilize around the 7.3% to 7.4% range for the year. The bank aims for a CASA mix of around 20% for FY27.

Product and Branch Expansion

The bank plans to open 78 new branches, including 8 new ones and 30 splits, along with 40 relocations, to enhance business reach and management. New product launches for Q2 FY27 include a Credit Line on UPI, which has been in testing for over a quarter, and Loans Against Shares, which will be added to the wealth management portfolio. The bank is also fast-pacing Nostro setup to offer trade FX.

Promoter Holding Company Status

Management addressed the rating downgrade of its holding company, Jana Holding and JCL, clarifying it was a technical default due to NCD holders seeking more time to sell shares. They emphasized that the bank is independently governed with no direct financial or operational impact, no common board members, and no cross-default linkage. The holding company's stake has reduced to 16.9% from a peak of 44%.

Segmental Business Performance

Secured assets grew by 29%, with affordable housing, MSME, vehicle loans, and gold loans showing strong year-on-year growth. The MFI segment grew 2.8% quarter-on-quarter and 18% year-on-year, with a book of INR10,240 crore. Micro LAP experienced a temporary blip in Q1 due to a model amendment towards direct sourcing but is expected to return to positive growth in Q2. The NBFC term loan book was reduced by design and is expected to remain flattish.

FY27 Outlook and Guidance

For FY27, the bank guided for gross loan growth of 19% to 21% and deposit growth of 23% to 25%. They also targeted a PAT of over 80% and aimed to reduce the cost-to-income ratio to a range of 63% to 65% from the current 66.7% to 67%. The MFI segment is targeted to grow 10% to 12% for the year.

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