Equitas Small Finance Bank sees strong asset quality all through FY24
Equitas Small Finance Bank is optimistic about maintaining its asset quality in the fiscal year 2024.
Equitas Small Finance Bank is aiming to maintain a strong asset quality throughout the fiscal year 2024. The bank expects the ratio to remain at 2.5 percent by the conclusion of the financial year in 2024.
Speaking to CNBC-TV18, PN Vasudevan, MD and CEO of the bank said, “From a Gross Non-performing Assets (GNPA) perspective pre-COVID our ratio used to be 2.5 percent level and we are now also practically close to that at 2.6 percent. Going forward, given the kind of macroeconomic factors that we have seen playing in the market, I think our GNPA should be in the range of 2.5 percent for the rest of the year.”
During the first quarter, Equitas Small Finance Bank demonstrated stability in its gross NPA ratio on a quarter-on-quarter (QoQ) basis, with GNPA remaining flat at 2.6 percent.
“From a portfolio quality, our GNPA has kind of remained flat or 2.6 percent quarter-on-quarter and I think that is a good show by the team.”
On the issue of slippages, Vasudevan assured stakeholders that the bank is confident in maintaining a comfortable level within the current range. He noted that annual slippages are currently at a satisfactory level, just under 3 percent.
He said, “Our first quarter collection was good and our annual slippage just under the 3 percent level is actually quite comfortable, I would say. The slippages should be in the same range, I don't expect it to go much beyond this, give or take maybe 10 basis points this way, that way.”
Despite the prevailing economic challenges, Equitas Small Finance Bank maintains an optimistic outlook for its growth prospects. The bank's projections indicate that the demand side is not a limiting factor, and they anticipate a robust annual growth rate of 25 percent.
The Microfinance Institution (MFI) segment constitutes 19 percent of Equitas Small Finance Bank's overall loan book. The bank intends to optimise this proportion and aims to bring it down to 18 percent by year-end.
It's noteworthy that a significant portion of the bank's loan book, approximately 83 to 84 percent, is tied to fixed-rate loans, indicating a certain level of stability in their lending practices.
(Edited by : C H Unnikrishnan)
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