Equitas Small Finance Bank Q2 Results: Net Profit grows 70% to Rs 198 Cr

Equitas-Small-Finance pic

Equitas Small Finance Bank Limited reported a substantial 70 per cent Year-on-Year (YoY) to Rs 198 crores in Q2FY24, compared to Q2FY23, reported Rs 116 Crores. This surge in profitability reflects the bank’s strong financial position.

Profit After Tax (PAT) for the quarter amounted to Rs 198 Crores, marking a substantial 70 per cent Year-on-Year (YoY) growth compared to Q2FY23, which reported Rs 116 Crores. This surge in profitability reflects the bank’s strong financial position.

Equitas Small Finance Bank also reported robust growth in its Gross Advances, which reached Rs 31,229 Crores, marking a 37 per cent YoY increase and a 6 per cent Quarter-on-Quarter (QoQ) growth. Additionally, the bank’s quarterly disbursements for Q2FY24 totaled Rs 4,961 Crores, representing a significant 29 per cent YoY growth.

The bank has made significant progress in managing non-performing assets (NPAs), with Gross Non-Performing Assets (GNPA) decreasing from 2.60 per cent in Q1FY24 to 2.12 per cent in Q2FY24. Equitas Small Finance Bank’s Return on Assets (RoA) and Return on Equity (RoE) stood at 2.03 per cent and 14.62 per cent, respectively, demonstrating its strong financial health.

Key Highlights for Q2FY24:

  • The bank continued its sustained credit growth, with advances increasing by 37 per cent YoY and 6 per cent QoQ.
  • A strong disbursement growth of 29 per cent YoY, totaling Rs 4,961 Crores, was registered.
  • Deposits saw substantial growth, increasing by 42 per cent YoY and 11 per cent QoQ, reaching Rs 30,839 Crores.
  • The cost of funds increased slightly, with a 27bps rise to 7.21 per cent in Q2FY24 compared to 6.94 per cent in Q1FY24.
  • The bank successfully sold Rs 162 Crores of NPA assets to Asset Reconstruction Companies (ARCs) during Q2FY24.

Key Ratios:

  • Net Interest Margin (NIM) experienced a marginal drop of 33 basis points, settling at 8.43 per cent.
  • The Cost-to-Income ratio improved, standing at 64.37 per cent in Q2FY24, compared to 65.05 per cent in Q1FY24 and 66.58 per cent in Q2FY23.

The NNPA improved by 102 basis points YoY to 0.91 per cent in Q2FY24, as compared to 1.93 per cent in Q2FY23. In an effort to strengthen the Provision Coverage Ratio (PCR), the bank set aside additional provisions of Rs 28.04 Crores during the quarter.

Commenting on the quarterly performance, P N Vasudevan, Managing Director and CEO of Equitas Small Finance Bank said: “This Financial year is witnessing and continue to witness strong credit growth coupled with stable asset quality and a healthy growth in retail term deposits. CASA seems to be the area of concern for the Banking Industry. For Equitas, the interest cost has risen to 7.21 per cent for the quarter. With most of the old deposits at lower rates getting replaced with new deposits at higher rates, we expect further increase in the interest cost to moderate over the next two quarters. Our Investments in Technology/Digitization continue to progress effectively, benefits of which should be felt in the upcoming years.”

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