Highlights:

The year started with a lot of challenges with second wave of COVID-19, but it also ended on a high note.

The fourth quarter performance completes the turnaround envisaged in August 2021 with three-fold objectives. First - rebuilding business volumes, second - improving asset quality and reducing credit cost and third - attracting good talent and stabilizing team. All of these objectives have been achieved and the bank has improved business and financial numbers.

NII was up 48% yoy 20% qoq. Business profitability is back on track with ROA at 2.3%. Net profit has jumped to Rs 127 crore and credit cost was just Rs 44 crore in Q4FY2022.

The disbursements were ever highest for the bank at Rs 4870 crore in Q4FY2022 and that is second time in a row.

Overall deposit buildup was very strong with the credit deposit ratio falling below 100% for the first time since beginning of operations.

The stress pool (PAR) and restructured loan book has reduced from 32% in June 2021 to around 12% currently.

The bank has been progressing well on attracting good talent across all levels.

Disbursements growth was led by secular growth across all verticals, although micro-banking continues to lead.

The micro-banking disbursement comprised of 24% of fresh loans in Q4 as against 16% in Q2 indicating a rise in demand with new customers.

Gross advances grew by 20% yoy and 10% qoq taking gross book to Rs 18162 crore end March 2022.

Deposits grew by 39% yoy and 18% qoq taking total deposits to Rs 18292 crore.

CASA has also shown tremendous growth of 85% yoy and 21% qoq taking the CASA ratio to 27%.

The cost of deposits continued to decline to 6% for Q4FY2022 versus 6.1% for Q3FY2022. Overall, cost of funds declined to 6.1% from 6.2% in Q3.

Collections have improved as bank has consistently strengthened the collection team further and had a detailed approach towards the different buckets and stress pool.

March 2022 collection efficiency stands at 100%.

Restructured book collection efficiency stands at around 89% for March 2022.

NPA collections have also been rising given the elevated ground efforts.

Incremental overdues (IODs) have almost come back to the pre-COVID level.

PAR book has reduced below 10% mark, which is not even one-third from its high of 30.8% in June. This is followed by improved asset quality with GNPA declining to 7.1% and NNPA to 0.6%.

SMA book is now at 2.5% as against 7% in September 2021.

The bank has continued to good trend in April 2022, showing net reduction in absolute PAR and NPA as a percentage of gross advances.

The bank has not used its floating provision of Rs 250 crore and despite improving portfolio quality. The bank is maintaining a high PCR of 92%, which builds an adequate buffer to support future growth.

Fourth quarter NIM was at 10.1%, a healthy increase from 9.1% in Q3 and 8.1% in Q2.

The bank is seeing a good credit demand. The momentum should further build on and provide a better overall growth in FY2023.

The slippages have come under control, which is providing a tailwind on the provisioning side.

Bank sees FY23 as a normal year in terms of slippages and credit costs should definitely be under control.

The cost to income ratio has increased in FY2022 and bank expects to reduce cost to income ratio in FY2023.

If another rate hike comes up, bank will have to adjust the microfinance book lending rates.

The collection costs are still on a higher side, which will taper off.

Gross NPA is Rs 1280 crore and write off is roughly Rs 800 crore.

Credit cost is expected to be sub-1% for FY2023. With net NPA of 0.6 and the PCR at 92%, bank believes provisioning requirement for FY2023 will be quite normal.

The total restructured book is Rs 845 crore of which GNPA is Rs 370 crore.

The restructured the book would completely runoff by the end of this fiscal.

The provision on restructured book is Rs 394 crore and total NPA provision is Rs 934 crore.

The bank added 1.2 lakh new customer in Q4FY2022 up from 1 lakh in Q3.

The fresh slippages were Rs 216 crore and the principle write off was Rs 271 crore in Q4FY2022.

On reverse merger, the bank will be able to comment on it once it moves RBI and SEBI.