The growth has come in from retail assets, which is the new division outside microfinance, and from microfinance as well. The growth rate has been high, predominantly because the base was much smaller.
Suryoday Small Finance Bank (SFB) saw assets grow 76% in FY19, while deposits grew 113%, R Baskar Babu, MD & CEO, tells Shritama Bose. The bank will focus on garnering retail deposits and take its current account savings account (CASA) ratio to 20% by March 2020 from 12% now, he says. Excerpts:
Your net interest income (NII) has grown 85% year-on-year (y-o-y) to `190.32 crore. What has loan growth been in FY19 and where have you seen this growth coming from?
We had about 76% growth in the portfolio compared to last year and the asset portfolio stands at `2,920 crore. The growth has come in from retail assets, which is the new division outside microfinance, and from microfinance as well. The growth rate has been high, predominantly because the base was much smaller. We are focusing on affordable home loans. Apart from that, we also do a small amount of SME (small and medium enterprises) lending. But, our focus area is retail assets.
What has deposit growth been like?
Deposits grew 113% and we ended the year with `1,593 crore worth of deposits. Time deposits are approximately around 88% and CASA is 12%. The first two years, we have focused not so much on CASA, but more in terms of getting retail fixed deposits. About 50:50 is the break-up between bulk and retail deposits on an average, even though bulk maybe 60% on a year-end basis. This year, we are targeting the CASA ratio to grow from 12% to 20% by the end of the financial year.
Small finance banks like yours have typically kept interest rates on deposits a little higher. The trend we are seeing now is of rates trending lower. So what would your strategy on rates be?
Currently, we will be maintaining our rates for the next couple of months as the focus is in terms of building traction for retail deposits. Where we are likely to reduce our rates is the bulk deposit segment, but not so much on the retail deposits. There may be a 25 bps (basis point) cut, but even that may not happen because now our focus is on building a much larger base of retail deposits and CASA.
How large is your network and in which states are you present now?
We have a total 382 branches at this point of time. We are present in 11 states. The main states would be Maharashtra, Tamil Nadu and Odisha. These are the key states. Then we have Karnataka and Madhya Pradesh. States where we have just entered are UP (Uttar Pradesh) and Chhattisgarh, where we have a very marginal presence.