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Suryoday Small Finance Bank Conference Call Summary
Overview • Date of Call: August 2, 2024 • Focus: Unaudited financial results for Q1 FY '25 (ending June 30, 2024) • Participants: Senior management, including MD and CEO
Key Financial Highlights • Gross Advances: Increased by 41.8% to INR 9,037 crores • Deposits: Grew by 42.2% to INR 8,137 crores • Asset Quality: Gross NPAs decreased to 2.7% from 3% • Net Interest Income: Rose by 30.5% to INR 293.2 crores • Capital Adequacy Ratio: Remains strong at 27.3%
Management Insights • Growth Confidence: Management optimistic about sustaining growth and meeting FY '25 targets • Collection Efficiency: Seasonal slowdown noted, expected normalization by Q2 • Provision Coverage Ratio (PCR): Improved to 83%, with a target to maintain above 80%
Future Aspirations • Universal Banking License: Focus on strengthening small finance bank platform before pursuing this • Credit Cost Projections: Planned at 2% to 3% annually over the next 4-5 years
Financial Projections • Return on Equity (ROE): Target of 15% to 16% for FY '25 • Cost of Funds: Expected to rise to approximately 7.90% in FY '25 • Credit Deposit Ratio: Currently at 110%, aiming for 100% by year-end
Loan Book Composition • Current Split: 58% microfinance, 42% retail assets • Medium-Term Goal: Achieve a 50-50 balance between microfinance and retail
Risk Management and Strategies • Deposit Strategy: Targeting bulk deposits between 20% to 30% • Growth Target for Advances: 30% to 35%, contingent on 40% to 45% growth in deposits • Vikas Loan Initiative: Aimed at enhancing customer relationships and reducing delinquency
Delinquency Trends • Current Collection Efficiency: Slight decline to around 98% • Localized Stress: Noted in specific states, but overall situation not alarming
Market Insights • Primary Markets: Tamil Nadu, Maharashtra, Karnataka, and Orissa • Yield Increase: Attributed to loan mix changes rather than repricing
Liquidity and Branch Expansion • Liquidity Coverage Ratio (LCR): Approximately 175%, exceeding regulatory requirements • Branch Expansion Plans: Adding 40-50 branches annually while balancing inclusive finance
Conclusion • Management expressed gratitude to participants and reaffirmed commitment to growth and stability.
Suryoday Small Finance Bank Limited Earnings Conference Call Summary
Date and Context • Date of Call: May 10, 2024 • Submission Date: May 15, 2024 • Focus: Audited financial results for Q4 and fiscal year ending March 31, 2024
Key Financial Highlights • Gross Advances: Increased by 41.5% to ₹8,650 crores • Deposits: Grew by 50.5% to ₹7,777 crores • Net Interest Income: Rose by 28.9% to ₹962.2 crores • Net Income: Increased by 40% to ₹1,181.6 crores • Gross Non-Performing Assets (NPAs): Decreased to 2.8% • Capital Adequacy Ratio: Strong at 28.4%
Strategic Focus • Micro-Banking Shift: Emphasis on serving low-income households • Customer Acquisition: Targeting 40,000 to 50,000 new customers with 70 new branches opened • Loan Portfolio Growth: Anticipated growth of 30%-35% in loan book and 40%-45% in deposits for FY25
Risk Management and Asset Quality • CGFMU Cover: Eligible for claims of ₹44-45 crores; expected recoveries of 70% • Collection Efficiency: Slight decline in Vikas Loans; restructuring collection organization • Credit Costs: Aiming to maintain below 3%
Future Projections • Return on Equity (ROE): Targeting 14%-16% • Return on Assets (ROA): Long-term goal of 2.3%-2.5% • Secured Loan Portfolio: Expected increase from 41% to over 45% in 2-3 years
Operational Insights • Cost Management: Aiming to improve cost-to-income ratio to around 57% • SLTRO Financing: ₹750 crores due in December 2024 • Non-Interest Income Growth: Attributed to higher disbursements, particularly in Vikas Loans
Management Initiatives • Digital Banking: Investments in technology and backend systems to enhance customer experience • Retail Book Enhancement: Introduction of a premium banking program
Conclusion • Management expressed gratitude to participants and emphasized ongoing commitment to growth and customer service improvements.
Financial Performance • Date of Call: February 9, 2024 • Growth Metrics: • Gross advances increased by 40.5% to INR 7,600 crores. • Disbursements rose by 34.9% to INR 4,580 crores. • Customer base grew by 20% to 26.3 lakhs. • Profit after tax surged from INR 38.8 crores to INR 155.1 crores. • Gross non-performing assets (GNPA) reduced to 2.9%. • Net interest income increased by 28.9% to INR 691.5 crores.
Vikas Loan Program • Target Segment: Average household income around INR 15,000. • Customer Classification: 5-6% earn above INR 3 lakhs, classified as MSME loans. • Portfolio Mix: Approximately 45% Vikas Loans.
Funding and Deposits • Funding Sources: Intention to maintain 30% from refinance institutions, possibly adjusting to 20-25%. • Deposit Composition: Only 18% of deposits are bulk, indicating strong retail reliance.
Microfinance Sector Insights • Collection Rates: Maintained at around 98% for Vikas Loans. • Stress Indicators: No significant stress observed in Tamil Nadu; some concerns in other states.
Growth and Expansion Plans • ROA Target: Over 2.5% in the upcoming quarter, aiming for 3-4% in 18 months. • Portfolio Goals: Targeting a balanced unsecured loan portfolio of 50-50 mix. • Market Expansion: Cautious approach to new markets like Bihar; pilot branches may be opened.
Employee and Operational Insights • Employee Costs: Expected to grow at 50% of asset growth. • Digital Initiatives: Plans to enhance digital liabilities and improve infrastructure.
Customer Engagement and Payment Methods • Customer Demographics: Majority are women; considering co-applicants. • Payment Methods: 70% of payments made through bank accounts, less than 10% in cash.
Conclusion • Call Wrap-Up: Baskar Babu expressed gratitude for participation and support, concluding the call.
Conference Call Overview • Date: November 10, 2023 • Purpose: Discuss unaudited financial results for Q2 and H1 FY '24 • Participants: Senior management including MD & CEO, CFO, and hosted by Elara Securities • Compliance: Transcript available on the bank's website per SEBI regulations
Financial Performance Highlights • Gross Advances: Increased by 28.7% YoY to INR 6,921 crores • Disbursements: Grew by 30.8%, mainly from Vikas and commercial vehicle loans • Customer Base: Expanded by 20% to 25.1 lakh • Profit After Tax: Surged nearly fourfold to INR 97.9 crores • Gross Non-Performing Assets (GNPA): Decreased from 9.9% to 2.9% • Deposits: Rose to INR 6,330 crores, with a focus on retail deposits
Strategic Initiatives • Geographic Expansion: Plans to deepen market penetration and expand geographically • Micro Home Loans: Currently in 25 branches across 10 states, aiming to increase monthly disbursement from INR 10-12 crores to INR 15-20 crores • Unsecured Business Loans: Targeting customers with borrowing history, average loan size between INR 75,000 to 1.5 lakhs
Cost and Growth Management • Cost of Funds: Peaked at 7.2%, expected to stabilize • Cost-to-Income Ratio: Target to reduce to 55% by year-end • Return on Assets (ROA): Projected to reach around 3% in 18 months • Branch Expansion: Plans to add 70-75 branches in inclusive finance and 30-35 in retail banking
Income and Loan Products • Non-Interest Income: Processing fees account for ~2% of volumes; PSLC income variable • Vikas Loans for JLG Customers: Eligibility requires completion of two cycles; two-thirds typically qualify • Credit Guarantee Fund for Micro Units (CGFMU): Covers ~80% of JLG portfolio
Partnerships and Underwriting • Lendingkart Partnership: Bank fully underwrites unsecured business loans; Lendingkart assists in origination • Fintech Collaborations: Plans to partner with two fintech entities for small-ticket loans
Conclusion • Management expressed gratitude to participants, emphasizing a focus on retail growth and improving CASA deposits.