Equitas SFB Q1 Results Review - Asset Quality Headwinds To Hinder Growth, Downgrade To Hold: Axis Securities

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..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..Click on the attachment to read the full report:.Equitas Small Finance Bank's Q1 Gross Advances Jump 18%.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Equitas SFB Q1 Results Review - Asset Quality Headwinds To Hinder Growth, Downgrade To Hold: Axis Securities

The brokerage expects margin pressures, sticky opex ratios and elevated credit costs to keep RoA significantly lower than the 2% seen over FY23-24.

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Equitas SFB Q1 Results Review - Asset Quality Headwinds To Hinder Growth, Downgrade To Hold: Axis Securities

The brokerage expects margin pressures, sticky opex ratios and elevated credit costs to keep RoA significantly lower than the 2% seen over FY23-24.

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