Suryoday Small Finance Bank conducted a conference call on 17 May 2023 to discuss its financial results for the quarter ended March 2023. Baskar Babu Ramachandran, MD&CEO of the bank addressed the call:

Highlights:

The growth of the bank has returned to pre-covid level. The loan book has expanded 21% to Rs 6114 crore end March 2023 over excluding the ARC sales the loan book has increased 29% to Rs 6541 crore end March 2023.

The disbursements of the company have surged 44% to Rs 5083 crore in FY2023.

Customer base of the company has increased by 19.9% to 23.1 lakh end March 2023.

The bank has reported net profit of Rs 77.7 crore in FY2023 recovering from losses of Rs 93 crore in FY2022.

The collection efficiency of the bank was a strong at 102.2%.

The deposit base increased 34.2% to Rs 5167 crore end March 2023.

The borrowings accounted for 28% of the overall liabilities of the bank.

The bank has substantially improved asset quality reducing gross NPA ratio to 3.1% from 11.8% a year ago. The NNPA ratio is also reduced to 1.5% from 5.9%.

The bank is targeting to reduce gross NPA ratio below 2% and NNPA ratio below 0.5% in FY2024.

The focus of the bank is on growing loan book by 30%, deposit book by 35%, achieving return on asset of 2.2% and RoE of over 15%.

The bank aims to raise the size of Vikas loan book to over Rs 2000 crore in FY2024.

The capital adequacy ratio of the bank is strong at 33.7% with Tier 1 ratio at 30.8% end March 2023.

Bank expects to maintain stable margins in FY2024 similar to FY2023.

The banking targeting operating profit of Rs 500 Crore in FY2024.

With the cleaning of balance sheet, the bank expects its credit cost at 1% for FY2024.

The bank is yet to revise its interest rate on fixed rate loan book and it would review the situation at end of Q1 FY2024. The bank expects to maintain the margin of 10%.

With the growth in the other states such as Gujarat, Karnataka etc, the bank expects to reduce the share of Maharashtra in its loan book to 30% from 40% in next 12 to 18 months.

The bank aims to have credit deposit ratio of 100% by March 2025.

The bank aims to raise Casa deposit ratio from 17% end March 2023 to 22% by end March 2024 and 25% by March 2025.

The fresh slippages of loans stood at Rs 55 crore, while recoveries and upgrades were at Rs 35 crore in Q4FY2023.

The restructured loan book of the bank stands at Rs 100 crore end March 2023.

The cost of funds is expected to be at 7.5% for FY2024.

The bank is targeting cost to income ratio of 57% for FY2024 and the medium target is 55%.

The bank is targeting to improve provision coverage ratio to above 90% by September 2023.

The long term target of the bank for RoA stands at 4%.

The entire bulk deposits book of the bank is non-callable.