Small finance banks (SFBs) saw higher growth in their deposits as compared to gross advances on a year-on-year basis in the quarter ended September, provisional data released by six banks showed. The gross advances rose 16.8% y-o-y while the growth in total deposits was higher at 17.2%, the average of estimates of six small finance banks showed.
However, on a sequential basis, the growth in loans was higher as compared to the deposits, data showed. This was largely on the back of growth in the retail and micro, small and medium enterprise segments.
Individual bank performance highlights
AU Small Finance Bank expects a 22.4% y-o-y growth in gross advances to Rs 1.17 lakh crore as on September 30, according to provisional figures. Deposits are expected to rise by nearly 21%.
Suryoday Small Finance Bank’s gross advances are expected to rise by 23% on year, while deposits are seen rising much higher at 35%, with CASA deposits growing nearly 57%. The small finance bank reduced its bulk deposits by 4% on year and 20% on quarter, while the growth in retail deposits rose by 45% on year and 12% on a sequential basis.
In terms of asset quality, the bank said that they received Rs 314 crore from Credit Guarantee Fund for Micro Units (CGFMU) during Q2FY26, representing 100% of the claim made by the bank. Consequently, the provision coverage ratio is expected to improve to nearly 62% and the net NPA ratio is estimated to reduce to 3.8%. According to a press release issued by the bank, 90% of the net NPA is covered under the CGMFU scheme.
“The bank shall continue to cover its eligible portfolio under Credit Guarantee Scheme as a prudent risk management practice, adopted in FY23,” it said.
Ujjivan Small Finance Bank’s gross advances are seen rising 14% y-o-y, while deposit growth is seen tad higher at 14.8% on year.
Focus shifts to secured lending and asset quality
Within the total gross loan book, group loans fell by 12% on year to Rs 13,106 crore as on September 30, while individual loans were up nearly 10% on year. The provisional data showed that the housing book is seen rising over 50% y-o-y, and the MSME book rising nearly 70%. Overall disbursements of the bank rose around 48% on year. The secured book of the small finance bank inched up to 47% as on September 30 from 46% a quarter ago, the bank said in the release.
Gross advances of Equitas Small Finance Bank are seen rising almost 9% on year and 4% on a sequential basis mainly on the back of improved disbursements during the quarter, the bank said. The micro finance and micro loan advances, which had degrown 22% on quarter in June, improved to a degrowth of 3% as on September 30.
The total deposits for the bank rose by 11% on year, however on a sequential basis, they fell by 0.6%.
In terms of asset quality too for the bank, Karnataka, which saw higher slippages over the last four quarters in the small business loans secured against house property, saw an improvement in the second quarter, the bank said. The net slippages in Karnataka improved to 7.98% in Q2 from 9.35% in Q1.
Esaf Small Finance Bank and Capital Small Finance Bank also expect double digit growth in their gross advances and total deposits as on September 30.
For EASF Small Finance Bank, secured advances grew by 62.31% and stand at Rs 11,711 crore as of September 30, data showed.
Secured advances includes gold loan, mortgage, mobility, MSME and agriculture. The secured advances formed 61.20% of the gross advances as on September 30 as against 39.34% a year ago, the bank said.
In terms of CASA ratio, all six banks saw an improvement on a sequential basis for the reporting quarter.