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Private sector lender Equitas Small Finance Bank Ltd on Friday (November 8) reported a 49.6% year-on-year (YoY) decline in net profit at ₹13 crore for the second quarter that ended September 30, 2024, due to additional provisions of approximately ₹146 crore for its microfinance portfolio.
In the corresponding quarter of the previous fiscal, Equitas Small Finance Bank posted a net profit of ₹25.8 crore, the bank said in a regulatory filing. The CNBC-TV18 poll had predicted a profit of ₹157.6 crore for the quarter under review.
Net interest income (NII), which is the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors, was flat at ₹802 crore. The CNBC-TV18 poll had predicted a Net interest income of ₹819.3 crore for the quarter under review.
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The gross non-performing asset (GNPA) stood at 2.95% in the September quarter against 2.73% in the June quarter. Net NPA came at 0.97% against 0.83% quarter-on-quarter.
In monetary terms, gross NPA stood at ₹1,022.8 crore against ₹889 crore quarter-on-quarter, whereas net NPA came at ₹330.3 crore against ₹264.1 crore quarter-on-quarter.
Equitas Small Finance Bank reported a slight improvement in its yield on gross advances, which rose by 4 basis points to reach 16.49% in Q2 FY25 over the previous quarter. The bank’s gross advances increased by 15% year-over-year and 3% quarter-over-quarter.
Within its portfolio, the non-microfinance segment recorded a growth of 20% year-over-year, led by a 23% growth in housing finance and a 28% increase in small business loans (SBL). Deposits also saw robust expansion, growing 29% year-over-year and 6% quarter-over-quarter.
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The used commercial vehicles (UCV) and used cars segments witnessed notable momentum, with disbursements reaching record quarterly highs of ₹887 crore and ₹323 crore, respectively. Advances for used cars surpassed ₹1,500 crore during the quarter, and the micro-loan against property (Micro-LAP) segment, part of SBL, saw disbursement growth of 156% year-on-year.
Additionally, the CASA ratio remained stable at 31%, with current account (CA) balances surging by 72% year-on-year. Retail term deposits grew significantly by 39% year-over-year to ₹17,340 crore.
Net interest margin (NIM) stood at 7.69% for Q2 FY25. However, the bank’s cost-to-income ratio increased to 66.09%, compared to 65.75% in the previous quarter and 64.37% in Q2 FY24. Return on Assets (RoA) and Return on Equity (RoE) for the quarter were recorded at 0.11% and 0.86%, respectively.
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Equitas SFB’s net worth reached ₹5,947 crore by the end of September 2024. Its total capital adequacy ratio (CRAR) was 19.36%, with Tier I at 18.11% and Tier II at 1.25%. The bank also maintained a strong liquidity coverage ratio (LCR) of 158.79% as of September 30, 2024. Profit from the sale of investments contributed ₹47.87 crore for the quarter.
Also Watch | PN Vasudevan, MD & CEO of Equitas Small Finance Bank discuss Q2 FY25 figures in an interview with CNBC-TV18.
In terms of profitability, net income, total operating expenses (Opex), and pre-provision operating profit (PPOP) grew year-over-year by 11%, 14%, and 6%, respectively, for Q2 FY25. The results came after the close of the market hours. Shares of Equitas Small Finance Bank Ltd ended at ₹68.68, down by ₹1.73, or 2.46% on the BSE.
