Skip to content

    Jana Small Finance Bank Limited

    JSFB
    Financial Services·6 Feb 2026
    Management Summary

    Jana Small Finance Bank reported a turnaround in Q3 FY26, with significant improvement in asset quality metrics like slippages and SMA trends, which had peaked in Q1. The bank achieved its highest disbursals in 18 months, driven by both secured and unsecured segments, alongside robust deposit growth and declining cost of funds. While profitability in Q3 was low at INR 10 crores, management provided strong guidance for Q4 and FY27, expecting substantial reductions in credit cost and a return to healthy ROA/ROE levels.

    Highlights

    5

    • Decisive improvement in asset quality with slippages declining 25% QoQ to INR 440 crores and SMA trend showing a sustainable drop to 4.6% in Q3 FY26.

    • Highest disbursal in 18 months for both secured and unsecured segments, with unsecured disbursals being the highest ever in the last 18 months.

    • Deposit book showed robust 30% YoY growth, with CASA ratio reaching 20% and cost of funds declining to 7.7%, expected to fall further to 7.5% in Q4 FY26.

    • Gold loan book grew 194% YoY to INR 1,752 crores, and affordable housing grew 35.3% YoY to INR 7,500 crores.

    • Management expects credit cost to significantly reduce in Q4 FY26 to INR 170-190 crores and further to 1.7-1.8% in FY27, alongside ROA targets of 1.5-1.6% and ROE of 14-15% for FY27.

    Concerns

    3

    • Management acknowledged under-judging the velocity of NPA flows in Q1 FY26 and being overly bullish on Q2 improvement, leading to a quarter-late turnaround.

    • Unsecured book's slow growth initially contributed to NIM compression of 20 bps and increased collection/recovery costs of INR 40 crores in 9M FY26.

    • Q3 FY26 PAT was INR 10 crores, described as the 'bottom quarter' for the bank.

    What Changed2

    vs Q4 FY26

    Guidance items14 → 17 (+3)Risks discussed2 → 5 (+3)
    Key financials

    Metrics

    24

    Periods

    5

    Headline

    10
    • NIM Growth (QoQ)
      10 bps
    • Deposit Book Growth
      30%
      YoY+30%
    • Total Deposits
      ₹33,733 Cr
      YoY+16%
    • Cost of Deposits
      7.7%
    • CASA Ratio
      20%

    Q1 FY26

    1
    • Credit Cost
      ₹196 Cr

    Q2 FY26

    3
    • Credit Cost
      ₹204 Cr
    • Total Slippages
      ₹591 Cr
    • Unsecured Slippages
      ₹360 Cr

    Q3 FY26

    9
    • Credit Cost
      ₹277 Cr
    • Gross NPA
      ₹829 Cr
    • Overall SMA
      4.6%
    • Unsecured SMA
      4.2%
    • Secured SMA
      4.8%

    June FY26

    1
    • Overall SMA
      6.2%

    Segment breakdown

    Affordable Housing
    ₹7,500 Cr Loan Book
    Micro
    ₹6,201 Cr Loan Book
    MSME
    ₹4,830 Cr Loan Book
    NBFCs
    ₹2,145 Cr Loan Book
    Vehicle Loans
    ₹1,554 Cr Loan Book
    Gold Loan
    ₹1,752 Cr Loan Book
    Unsecured Advances
    4.1% Loan Book Growth
    List

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Liquidity disclosed

    LCR has normalized to 120%. The bank focuses on long tenor deposits with 90.8% of bulk deposits and 90.4% of retail deposits being 1 year and above.

    Guidance & targets

    17
    CategoryTargetPriority
    Credit Cost
    Credit Cost
    INR 170-190 crores
    		High
    Credit Cost
    Credit Cost
    2.6-2.7%
    		Medium
    Credit Cost
    Credit Cost
    1.7-1.8%
    		High
    Asset Quality
    Gross NPA
    INR 830-850 crores
    		High
    Asset Quality
    Overall SMA
    4%
    		High
    Asset Quality
    Unsecured SMA
    3.8%
    		High
    Asset Quality
    Secured SMA
    4%
    		High
    Profitability
    PAT
    INR 140-160 crores
    		High
    Profitability
    NIM
    7-7.1%
    		High
    Profitability
    ROA
    1.5-1.6%
    		High
    Profitability
    ROE
    14-15%
    		High
    Cost of Funds
    Cost of Funds
    7.5%
    		High
    Efficiency
    Cost-to-Income Ratio
    60-62%
    		High
    Credit Growth
    Micro LAP Growth
    20%
    		Medium
    Credit Growth
    Gold Loan Book
    INR 4,000 crores
    		Medium
    Risk Management
    Unsecured Book under Guarantee
    72%
    		High
    Deposit Growth
    CASA Growth
    25-30%
    		Medium

    Credit Cost

    Next quarter (Q4 FY26 results)
    CurrentQ3 FY26 at INR 277 crores
    TargetQ4 FY26 in INR 170-190 crores range

    Why it matters

    A significant reduction in credit cost is crucial for the bank's return to profitability and achieving its ROA/ROE targets.

    It's fair to say that we should expect our lowest credit cost for the year coming up in quarter 4, which I have stated here as INR 170 crores to INR 190 crores as a range.

    How to verify

    key_financials.metrics[label='Credit Cost (Q4 FY26)']

    Risks & concerns

    5
    RiskSeverity

    Under-judging NPA flows and being overly bullish on Q2 improvement

    Management admitted to under-judging Q1 NPA flows and being too optimistic about Q2 improvement, leading to a delayed turnaround. — Management acknowledged

    medium

    Impact of slow unsecured book growth on NIM and increased costs

    Slow growth in the unsecured book caused a 20 bps NIM compression and INR 40 crores in increased collection/recovery costs over 9 months. — Management acknowledged

    medium

    Labor code change impact

    Labor code changes impacted the bank by INR 12 crores. — Management acknowledged

    low

    Tight liquidity in Q4 (January)

    Management noted that January was 'fairly tight' on liquidity, though system liquidity has since improved. — Management acknowledged

    low

    Gold price volatility for gold loan book

    Management stated LTV rates for gold loans are about 52.3% and they ensure customer repayment ability, mitigating risk unless there's an 'unexpected' halving of gold prices. — Analyst downplayed

    low

    Q&A highlights

    8

    “our credit cost in quarter 4 will be down in a significant way from quarter 3... In the coming year, we expect the credit cost... to be in the 1.7% to 1.8% range.”

    Provides clear forward guidance on a key profitability driver, indicating a significant improvement from current levels.

    asked by Aman Patle

    2 min read5 chapters

    Detailed Narrative

    01

    Asset Quality Turnaround and Outlook

    Jana Small Finance Bank reported a decisive turnaround in asset quality during Q3 FY26, with slippages declining 25% from INR 591 crores to INR 440 crores. The overall SMA book reduced from a peak of 6.2% in June to 4.6% in Q3, with expectations to reach 4% by year-end. Management guided for a significant reduction in credit cost for Q4 FY26 to INR 170-190 crores, and further to 1.7-1.8% for FY27, indicating a strong recovery trajectory.

    02

    Robust Deposit Growth and Declining Cost of Funds

    The bank's deposit book demonstrated robust growth, increasing 30% year-on-year to INR 33,733 crores, with a 16% growth this year. The CASA ratio improved to 20%, supported by a 41.4% year-on-year growth in CASA deposits to INR 6,742 crores. Concurrently, the cost of deposits has fallen to 7.7% and is expected to further decline to 7.5% in Q4 FY26, enhancing NIM.

    03

    Strong Disbursal Momentum and Portfolio Mix Shift

    Q3 FY26 marked the highest disbursal in 18 months for both secured and unsecured segments, with unsecured disbursals reaching an all-time high. The secured book continues to grow strongly, led by affordable housing (INR 7,500 crores, up 35.3% YoY) and gold loans (INR 1,752 crores, up 194% YoY). The bank is consciously shifting its portfolio focus towards affordable housing over Micro LAP due to market conditions and better anchor business potential.

    04

    Profitability and Efficiency Targets

    While Q3 FY26 PAT was INR 10 crores, management described it as the 'bottom quarter' and provided strong guidance for Q4 FY26 PAT of INR 140-160 crores. For FY27, the bank targets an ROA of 1.5-1.6% and an ROE of 14-15%, with NIM expected to cross 7%. The cost-to-income ratio is projected to normalize to 60-62% by Q2 or Q3 of the next financial year, reflecting improved operational efficiency.

    05

    Guarantee Program and Risk Mitigation

    Jana Small Finance Bank has strategically placed 62% of its unsecured book under a guarantee program, aiming to increase this to 72% by March FY26. This initiative is designed to mitigate event risks and provide future recovery potential, with claims from the FY25 guaranteed book expected to be realized from September 2026 onwards. The bank also noted that its LCR has normalized to 120%, ensuring adequate liquidity.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.