📉 ESBL: SELL Signal (8/10) – Transmission of Quarterly report for the period ended Sep 30, 2025

📌 Key Takeaways

• 📉 Total income decreased significantly by 46.7%, from Rs. 30.77 million to Rs. 16.38 million.
• ⬆️ Operating expenses increased slightly by 4.1%, from Rs. 39.01 million to Rs. 40.60 million.
• ❗️ Loss before tax surged by 195%, increasing from Rs. 9.05 million to Rs. 26.79 million.
• ❗️ Net loss after tax rose sharply by 188%, from Rs. 9.37 million to Rs. 26.97 million.
• ❗️ Loss per share increased by 17.6%, from Rs. (0.17) to Rs. (0.20).
• 💰 Administrative expenses increased to Rs. 39.69 million, a 6% rise compared to Rs. 37.45 million in Sep 2024.
• 📉 Cost-to-income ratio worsened due to reduced income and sustained expenses.
• 🏢 Management plans to close two non-performing branches.
• Staff payroll reduced to Rs. 5.8M from Rs. 7.6M, starting September 25, 2025.
• 💻 Emphasis on cost optimization, digital transformation, and diversification of income sources continues.
• 🏦 The bank is actively negotiating annual fees and subscriptions to reduce costs.
• 🌱 Focus remains on improving operational efficiency and exploring fee-based revenue channels.
• 💪 Strategic measures are being reviewed to enhance capital adequacy and shareholder value.
• 🏦 Acknowledgment of the Board’s appreciation to shareholders, clients, employees, and regulatory authorities.

🎯 Investment Thesis

Based on the reported results, a SELL recommendation is warranted. The significant decline in income, increased losses, and operational challenges indicate a deteriorating financial position. While management is taking steps to address these issues, the near-term outlook remains uncertain. A turnaround will take time and is dependent on successful implementation of strategic measures.