Summary
Jana Small Finance Bank - Q3 FY 2026 Earnings Call Summary Friday, February 06, 2026 4:00 PM IST
Event Participants
Executives 3 Abhilash Sandur (CFO), Ajay Kanwal (MD & CEO), Krishnan Subramania Raman (Executive Director & Head, Retail Financial Services)
Analysts 4 Aman Patle, Chaitya, Harshit Jhaveri, Smit Shah
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Deposits | ₹33,733 crores | +30% YoY; Guided to reach 20% growth for full FY26. |
| CASA Ratio | 20.0% | +41.4% YoY; CASA growth driven by retail traction and new segment launches. |
| Total Advances | ₹27,823 crores | +16.0% YoY; Secured book continues to dominate growth at 73% of total mix. |
| Gross NPA | ₹829 crores | Improved from Q2; Expected to remain flat between ₹830-850 crores in Q4. |
| Net NPA | <1.0% | Maintained within Universal Bank eligibility criteria despite recent stress. |
| SMA Book (0,1,2) | 4.6% | -160 bps from June peak (6.2%); Guided to reach 4.0% by March 2026. |
| Net Interest Margin | 7.0%+ (estimated) | +10 bps QoQ; Reversal of declining trend due to return of unsecured growth. |
| Cost of Funds | 7.7% | -20 bps expected in Q4 (to 7.5%); Incremental cost of deposits currently at ~7.0%. |
| Credit Cost | ₹277 crores | Peaked in Q3; Guided to drop to ₹170-190 crores in Q4 FY26. |
| PAT | ₹10 crores | Bottomed out in Q3; Guided to ₹140-160 crores for Q4 FY26. |
| CRAR | Not Disclosed | Management noted no immediate capital concerns; focus remains on internal accruals. |
Geographic & Segment Commentary
- Affordable Housing: This remains the largest secured asset book at ₹7,500 crores, growing at 35.3% YoY. It is the primary strategic focus for building “anchor” customer relationships and provides better operating leverage than Micro LAP.
- Gold Loans: Reported the highest growth at 194% YoY, reaching ₹1,752 crores. Management targets a ₹4,000 crore book by leveraging 550 active branches with an average LTV of 52.3%.
- Unsecured/MFI: Book stabilized with 4.1% QoQ growth after previous de-growth; now 62% covered under the credit guarantee program. Collection efficiency for the BC (Business Correspondent) book returned to 99% in January.
Company-Specific & Strategic Commentary
- Asset Mix Strategy: The bank remains committed to an 80:20 secured to unsecured ratio (currently 73:27). Strategic shift involves placing 72% of the unsecured book under credit guarantee schemes by March 2026 to mitigate event risks.
- Universal Bank Application: The RBI returned the application due to “shortages”; management is currently updating and will resubmit. The bank meets the 3% GNPA and 1% NNPA thresholds required for eligibility.
- Credit Line on UPI: Launched as a digital-only solution for small-ticket (₹15k-40k) short-term needs like education and consumer durables. This is intended to drive “stickiness” without materially altering the 80:20 asset mix.
- Board Succession: Two veteran directors (including the founder) are stepping down after completing the maximum 8-year term. Ms. Chitra Talwar has received RBI approval to take over as part-time Chairperson.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| ROA / ROE | 1.5-1.6% / 14-15% | Target for FY27 based on normalized credit costs and margin expansion. |
| Credit Cost | 1.7-1.8% | Outlook for FY27; significantly lower than the ~2.7% expected for FY26. |
| Cost to Income | ~60% | Expected to normalize by Q2/Q3 FY27 as unsecured interest income resumes growth. |
| PAT (Q4 FY26) | ₹140 - ₹160 crores | Anticipated sharp recovery as slippages drop and recovery costs ebb. |
Risks & Constraints
| Risk | Context |
|---|---|
| Guarantee Timing | Claims from the guarantee program are only realized 18 months after the financial year-end. This creates a P&L lag where the bank pays premiums and carries provisions today for recoveries that only manifest in FY27/28. |
| Liquidity Tightness | Management noted January was “very tight” for deposit growth and liquidity. While conditions improved in February, systemic liquidity remains a watch point for meeting the 20% deposit growth target. |
| Asset Quality Lag | Management admitted to misjudging the velocity of NPA flows in Q1/Q2 FY26. While Q3 showed improvement, the bank is still working through the tail-end of MFI stress. |
Q&A Highlights
Asset Quality & Credit Costs
- Question: Has the credit cost bottomed out and what is the outlook for next year? (Aman Patle)
- Answer: Credit cost peaked in Q3; Q4 will be significantly lower (₹170-190Cr). For FY27, credit cost is expected to normalize to 1.7%-1.8% as the SMA book is now on a sustainable decline (Ajay Kanwal).
Guarantee Program
- Question: Can you explain the timing and certainty of claims from the guarantee corporation? (Smit Shah)
- Answer: The process is transparent but slow; claims are raised 18 months post-FY. We expect ₹120Cr in FY27 and ₹300Cr in FY28 based on current NPA flows. We are confident in recovery as peers have already received payouts (Ajay Kanwal).
Slippages & Collections
- Question: How is the reduction in slippages split between secured and unsecured? (Chaitya)
- Answer: Total slippages fell from ₹591Cr (Q2) to ₹438Cr (Q3). This includes ₹196Cr from secured and ₹242Cr from unsecured. Bucket zero collection efficiency is now over 99% (K.S. Raman).
Universal Bank Rationale
- Question: Does the Universal Bank application impact your P&L projections? (Chaitya)
- Answer: We do not bake UB benefits into our projections. If approved, it will provide “top-up” benefits through lower cost of funds and better MSME supply chain business (Ajay Kanwal).
Key Takeaway
Jana Small Finance Bank characterized Q3 FY26 as a pivotal “bottoming out” quarter, admitting to a one-quarter lag in managing the recent MFI stress cycle. While PAT was muted at ₹10 crores, the bank saw a decisive drop in SMA levels (from 6.2% to 4.6%) and a reversal in NIM compression (+10 bps). Strategically, the bank is de-risking its unsecured book by moving 72% of it under credit guarantee programs, though the financial benefits will only realize in FY27/28. With secured assets now at 73% of the mix—led by Affordable Housing and Gold Loans—and cost of funds trending downward to 7.5%, management is pivoting toward growth. The bank has guided for a sharp recovery in Q4 FY26 with a PAT target of ₹140-160 crores and an FY27 ROA target of 1.5-1.6%, supported by a resubmission of its Universal Bank application.
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