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Axis Securities Report
Equitas Small Finance Bank Ltd.'s disbursements de-grew sharply by 15/21% YoY/QoQ, owing to degrowth across most segments with growth impacted by general elections, extended heatwaves and business seasonality.
Advances grew by 18/2% YoY/QoQ, with growth led by small business loan (+27/5% YoY/QoQ) and home loans (35/4% YoY/QoQ). MFI portfolio growth was weak at 6% YoY and de-grew by 5% QoQ.
Deposits growth was robust at 35/4% YoY/QoQ, primarily led by growth in TDs (+51/5% YoY/QoQ). Current account and savings account deposits grew by ~10/1% YoY/QoQ and CASA ratio stood at 31.2% versus 38.4/32.0% YoY/QoQ. Credit-deposit ratio improved to 92.9% versus 95% QoQ.
Net interest income grew by 8/2% YoY/QoQ owing to modest credit growth momentum and a 20 bps QoQ NIM contraction. NIMs stood at 7.97% versus 8.17% QoQ. Non-Interest grew by 22% YoY and de-grew by 13% QoQ. Opex grew by 11/3% YoY/QoQ. C-I ratio inched up to 66.3% versus 65.9/63.5% YoY/QoQ. Pre-provision operating profit grew by 9% YoY and de-grew by 9% QoQ.
Elevated credit costs hurt earnings. To strengthen the provision coverage ratio, the Equitas SFB has made additional floating provisions of Rs 180 crore. Credit cost without considering the floating provision is at 1.4%. PAT de-grew by ~86% YoY/QoQ each.
Asset quality deteriorated with gross/net non-performing asset at 2.7/0.8% versus 2.6/1.2% QoQ. Slippages during the quarter stood at Rs 385 crore versus Rs 356 crore QoQ.
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