SFBs report fall in Q2 PAT as asset quality worsens

AU Small Finance Bank said its mean postulation ratio successful Q2FY22 stood astatine 109%, astatine pre-Covid levels.

By Piyush Shukla

Small concern banks (SFBs) reported a 13-60% year-on-year diminution successful their nett net for the July-September (Q2FY22) 4th owing to deterioration successful the plus quality.

AU Small Finance Bank, which had gross advances of Rs 36,405 crore arsenic connected September end, reported a nett net of Rs 279 crore, little 13% than the erstwhile year. The lender’s gross non-performing plus ratio (GNPA) stood astatine 3.16%, higher than 1.54% a twelvemonth ago. In implicit terms, gross atrocious loans roseate to Rs 1,151 crore, compared with Rs 423 crore from a twelvemonth ago.

Equitas SFB reported a 60% year-on-year plunge successful its nett net for Q2 astatine Rs 41 crore owed to deteriorating plus prime and consequent higher provisions. The lender’s GNPA ratio roseate 234 ground points connected twelvemonth to 4.82%. Net NPA ratio was higher astatine 2.46%, against 1.13% a twelvemonth ago. Due to higher atrocious loans, full provisions different than taxation and contingencies roseate to Rs 137.81 crore, higher by 84.4%.

Equitas said its July-September bottomline was affected connected relationship of higher provisions for restructured assets. The slope carries Rs 196-crore provisions towards restructured indebtedness publication of Rs 1,401 crore.

Ujjivan Small Finance Bank reported a nett nonaccomplishment of Rs 274 crore successful the reporting 4th connected relationship of higher provisions. It had reported a nett net of Rs 96 crore a twelvemonth ago. As connected September 30, Ujjivan’s GNPA ratio stood astatine 11.80%, sharply higher than 0.98% a twelvemonth agone and 9.79% arsenic connected June end. “We person done large restructuring and taken accelerated recognition provisions during the quarter. We believe, taxable to imaginable 3rd question of Covid, our GNPA has peaked and volition gradually trim hereon,” said Martin PS, serviceman connected peculiar duty, successful a post-earnings release.

Suryoday SFB reported a nett nonaccomplishment of Rs 1.9 crore owing to higher provisions. The lender’s gross atrocious indebtedness ratio roseate 796 ground points connected twelvemonth to 10.21%. Subsequently, its provisions roseate implicit six folds to Rs 97.3 crore.

Asset prime outlook

Even arsenic SFBs reported deteriorating plus prime successful Q2, trends successful collections amusement that the aforesaid whitethorn amended successful the 2nd fractional of existent fiscal year. AU Small Finance Bank said its mean postulation ratio successful Q2FY22 stood astatine 109%, astatine pre-Covid levels.

“While the wide GNPA remained dependable compared to the archetypal quarter, determination was improved postulation efficiency, starring to simplification successful overdue cases betwixt 1 and 90 days. And with X-bucket postulation ratio coming backmost to the pre-Covid level, we expect to scope dependable authorities operating level shortly,” said PN Vasudevan, MD and CEO astatine Equitas Small Finance Bank, successful a post-earnings release.

In a caller speech with FE, Carol Furtado, main operating serviceman astatine Ujjivan SFB, said, “Collections person picked up well. We are focused connected reducing the PAR (portfolio astatine risk) travel to higher buckets, collections from restructured and NPA pool, further expanding wide collections. With this context, we judge things successful H2 (Oct-March) would beryllium amended connected the recognition prime front.”