Capital Small Finance Bank targets credit growth at 22% in FY27. Managing Director and CEO Sarvjit Singh Samra speaks to Christina Titus about the focus areas for the fiscal, striking a balance between liquidity and efficiency and expansion plans. Excerpts:
What will be your focus in FY27?
We intend to grow our top line around 22% and want to improve the bottom line at a rate faster than the top line. In the current fiscal, we are aiming to improve ROA (return on assets) to around 1.35–1.4% from 1.23% last year.
This year, we are targeting around 22% advance growth, with deposit growth keeping pace. We are operating with a lower CD (credit-deposit) ratio than last year, and we aim to improve it further. Over the medium term, we aim to grow the advances book to Rs 16,000 crore by FY29.
What CD ratio are you targeting?
We closed the last quarter with an average CD ratio of 83%. We believe there is an opportunity to accelerate it. We prefer to operate in the 85–90% range going ahead. That’s why we always say we want corresponding deposit growth.
How do you strike a balance between liquidity and efficiency?
There needs to be a fine balance. With LCR above 180%, and a capital adequacy ratio of 21.6%, the balance sheet has ample liquidity, so the focus should be on optimising it. We are targeting an optimal balance sheet with LCR in the 140–160% range and the CD ratio around 85–90% to ensure both efficiency and adequate liquidity.
What supported the Q1 margin expansion, and what is the FY27 margin outlook?
The growth in NIM (net interest margin) was mainly driven by deposit repricing. We will be maintaining the NIM at the current levels, and then we look forward for expansion in the coming years.
What are your FY27 branch expansion plans.
We aim to have 300 branches by FY29. We are expanding our presence in Haryana and Rajasthan. We plan to enter Uttar Pradesh soon. More than half of the planned new branches will be outside Punjab. The share of advances from outside Punjab stands at 25%. We expect it to increase to 30% by FY29.
How concerned are you about rising crude prices and weak monsoon?
We are closely monitoring oil prices and geopolitical developments, while below-normal rainfall is expected to have a limited impact on agri-lending markets in Punjab and Haryana due to improved canal irrigation. We focus majorly on middle-income farmers, rather than marginal ones.