Equitas Small Finance Bank posts 91.1% YoY growth in Q1 net profit
Introduction
Equitas Small Finance Bank Limited is a listed public company that provides banking and financial services to its customers. The bank was founded in 2016 as a microfinance lender and is a subsidiary of the holding company Equitas Holdings Ltd. The bank has its headquarters in Chennai, Tamil Nadu, and operates in 11 Indian states with over 400 branches. The bank’s vision is to be a socially responsible bank that provides financial inclusion and empowerment to its customers through innovative and affordable solutions.
Q1 financial highlights
Equitas Small Finance Bank, one of the leading private lenders in India, has announced its financial results for the first quarter of the fiscal year 2023-24. The bank has reported a net profit of Rs 191.2 crore for the quarter that ended on June 30, 2023, registering a 91.1 percent year-on-year (YoY) growth compared to Rs 100 crore in the same period last year.
The bank’s net interest income (NII), which is the difference between interest earned and interest expended, also increased by 28.8 percent YoY to Rs 522.4 crore from Rs 405.5 crore in Q1 FY23. The net interest margin (NIM), which is a key indicator of profitability, improved to 9.4 percent from 8.9 percent in the previous quarter and 8.6 percent in Q1 FY23.
Asset quality and capital adequacy
The bank’s asset quality also improved as the gross non-performing assets (NPAs) ratio declined to 2.68 percent from 4.58 percent in Q4 FY23 and 2.88 percent in Q1 FY23. The net NPA ratio also decreased to 1.35 percent from 2.74 percent in Q4 FY23 and 1.56 percent in Q1 FY23. The bank’s provision coverage ratio (PCR) stood at 62.9 percent as of June 30, 2023.
The bank’s total deposits grew by 34.6 percent YoY to Rs 18,949 crore as of June 30, 2023, while the total advances increased by 25.7 percent YoY to Rs 17,534 crore. The bank’s capital adequacy ratio (CAR) was at 22.5 percent as of June 30, 2023, well above the regulatory requirement of 15 percent.
Business strategy and outlook
The bank’s managing director and CEO, P N Vasudevan, said that the bank has delivered a strong performance in Q1 despite the challenges posed by the second wave of the COVID-19 pandemic. He said that the bank has focused on maintaining adequate liquidity, strengthening its digital capabilities, and expanding its customer base and product offerings.
He also said that the bank has received approval from the Reserve Bank of India (RBI) to open 50 new branches in FY24, which will help the bank to increase its presence and reach the underserved and unbanked segments of society.
About Equitas Small Finance Bank
Equitas Small Finance Bank is one of the ten entities that received a license from the RBI to operate as a small finance bank in 2015. The bank offers a range of banking products and services such as savings accounts, current accounts, fixed deposits, recurring deposits, microloans, small business loans, housing loans, vehicle loans, gold loans, and other services such as ATM cards, internet banking, mobile banking, UPI, Bharat Bill Pay, and Aadhaar-enabled payment system.
The bank’s vision is to be a socially responsible bank that provides financial inclusion and empowerment to its customers through innovative and affordable solutions.
Conclusion
Equitas Small Finance Bank has shown impressive growth and performance in Q1 FY24 despite the adverse impact of the pandemic on the economy and the banking sector. The bank has improved its profitability, asset quality, capital adequacy, and customer service while pursuing its social mission of financial inclusion and empowerment. The bank has also diversified its product portfolio and enhanced its digital capabilities to cater to the evolving needs and preferences of its customers. The bank’s future plans include expanding its branch network, launching new products and services, and exploring new opportunities for growth and innovation.
Disclaimer
This blog post is for informational purposes only and does not constitute any investment advice or recommendation. The information contained herein is based on publicly available sources and may not be accurate or complete. Readers are advised to do their own research and analysis before making any investment decisions based on this blog post or any other source of information.
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