Release Date: May 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gross advances increased by 41.5% year-on-year, reaching INR 8,650 crores in FY '24.
- Deposits grew by 50.5% to INR 7,777 crores in FY '24, with a CASA ratio improvement from 17.1% to 20.1%.
- Net interest income rose by 28.9% year-on-year to INR 962.2 crores.
- Gross nonperforming assets reduced to 2.8% from 3.1%, and net nonperforming assets decreased to 0.8% from 1.5%.
- The bank remains well-capitalized with a CRAR of 28.4%, significantly above the regulatory requirement.
Negative Points
- High concentration risk with 66% exposure to the top 3 states.
- Cost of funds increased from 6.7% in FY '23 to 7.3% in FY '24.
- Collection efficiency for Vikas Loan showed a marginal decline, indicating potential stress in collections.
- The bank's cost to income ratio, including CGFMU expenses, stood at 61.6%, indicating high operational costs.
- The bank's reliance on SLTRO financing, which will mature by December 2024, poses a challenge for cost management.
Q & A Highlights
Highlights from Suryoday Small Finance Bank Ltd (BOM:543279, Financial) Q4 FY '24 Earnings Call
Q: Sir, any plans to reduce the exposure to top 3 states because on a year-on-year basis, still at 66% the concentration seems to be high?
A: Yes, Shailesh, we will work on progressive improvement. We have had a little over 2% improvement year-on-year, and this year will be crucial for us to improve that mix. (Kanishka Chaudhary, CFO)
Q: Can you throw some light on the CGFMU cover, how is that expense shaping up for next year?
A: We are now eligible for making claims for the first set of cover that we did about a year back. We aim to make our first claim in this quarter itself. The amount eligible for claim under the CGFMU scheme would be about INR 44-45 crores worth of NPA, of which 72.75% is what we would be making the claim on. (Kanishka Chaudhary, CFO)
Q: Can you give some guidance for FY '25 in terms of growth in advances, deposits, CASA?
A: In terms of loan book, we are talking about a 30-35% growth. For deposits, we intend to have around a 40-45% growth. We aim to improve our CD ratio to 100% by the end of the financial year. (Kanishka Chaudhary, CFO)
Q: There is some marginal decline in terms of collection efficiency for our Vikas Loan in this quarter. Anything to read into it?
A: We recognize that the book has grown almost 2x as compared to last year. We are rebuilding our entire collection organization to cater specifically to the increasing number of VL customers. (Kanishka Chaudhary, CFO)
Q: On customer addition, we are a bit on the lower side compared to our growth in general for advances. What is the strategy going ahead for FY '25?
A: We added around 70 branches in a year. The intent is to increase new customer acquisition by 40,000 to 50,000. We continue to focus on acquiring new to credit customers prudently. (Baskar Ramachandran, CEO)
Q: What is your ROI guidance for the next few years?
A: We are targeting an ROA of around 2.25% or a little over that. We aim to offer better pricing for second cycle VL customers based on their credit performance. (Kanishka Chaudhary, CFO)
Q: Was there any additional provision this quarter?
A: Yes, we have tweaked a couple of our policies in terms of provisioning, which has helped improve our PCR numbers. For the unsecured microfinance book, we will be making 50% provision once an account becomes NPA. (Kanishka Chaudhary, CFO)
Q: What do you see in terms of credit cost in FY '25?
A: We aim to maintain the credit cost in the range of 1.5% to 1.8%. (Kanishka Chaudhary, CFO)
Q: What are the additional initiatives to increase your retail book over the next 2 to 3 years?
A: We will continue to build our retail granular book, launch a premium banking program, and focus on value-generating segments such as stock and institutional business. We will also leverage our microfinance centers and higher locations. (Unidentified Company Representative)
Q: What are the tech initiatives over the next 2 to 3 years?
A: We have invested heavily on the back end and middleware. The next 2 years will focus on customer-friendly digital experiences and robotic process automation to simplify processes for customers. (Unidentified Company Representative)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
