Suryoday Small Finance Bank Limited has announced its unaudited financial results for Q2 and H1 FY25, showcasing significant growth in several key areas, although not without some challenges. The bank reported a substantial increase in its gross advances portfolio, which rose by 35.2% year-on-year (YoY) to ₹9,360 crore in Q2 FY25. Disbursements also grew, albeit at a more modest pace, reaching ₹1,682 crore, representing a 5.2% YoY increase.

Despite these growth metrics, Suryoday faced a decline in its profit after tax (PAT), which fell by 9.8% YoY to ₹45.4 crore. This decrease indicates ongoing challenges, particularly in asset quality management, as the bank’s gross non-performing assets (GNPA) ratio remained stable at 2.9%, while the net NPA improved to 0.8% compared to 1.4% in the previous year.

Strong Advances Growth and Deposit Performance

Suryoday Small Finance Bank’s gross advances rose significantly by 35.2% in H1 FY25 compared to H1 FY24, reaching ₹9,360 crore. The growth trajectory was supported by robust traction in segments such as wheels and mortgages, which saw a steady increase. Disbursements for the first half of the fiscal year stood at ₹3,421 crore, reflecting a 22.7% increase YoY. In particular, the bank’s Vikas Loans segment showed strong performance with a 19.6% rise in disbursements.

On the deposits front, Suryoday recorded a 38.6% increase, with total deposits amounting to ₹8,851 crore in Q2 FY25. Retail deposits represented 80.2% of the total deposits, showing a steady rise from 77.6% in the previous year. The bank’s CASA ratio also improved to 17.9% as of September 2024, up from 15.7% in September 2023.

Mixed Profitability Trends

While Suryoday Bank’s overall income increased by 27.4% YoY, reaching ₹347.4 crore in Q2 FY25, the profit margins faced pressure. Net interest income (NII) rose by 35.7% YoY to ₹300 crore, but the pre-provision operating profit (PPOP) increased by a relatively modest 34.5% YoY to ₹126.9 crore. The decline in PAT, from ₹50.3 crore in Q2 FY24 to ₹45.4 crore in Q2 FY25, highlights the impact of rising operational costs and a challenging operating environment.

Expert Insights: Focus on Asset Quality and Digital Innovation

Commenting on the bank’s performance, Managing Director and CEO Baskar Babu Ramachandran noted that while the bank delivered steady growth, it remains committed to maintaining asset quality amid industry-wide challenges. He highlighted that despite the sector’s issues with asset deterioration, Suryoday’s GNPA ratio has remained stable, and its NNPA has improved significantly, indicating effective risk management practices.

Ramachandran also emphasized the bank’s push towards digital transformation, focusing on digital and paperless loan disbursement processes to enhance customer experience. The bank’s expansion into digital banking infrastructure is part of its strategy to increase digital deposits, supported by the launch of Smart Banking Outlets across micro-markets.

Suryoday’s Market Position

Suryoday Small Finance Bank, listed on both the NSE and BSE, continues to strengthen its position in India’s financial sector. With a focus on promoting financial inclusion, the bank has expanded its presence to 15 states and Union Territories, operating through 704 banking outlets. As the bank navigates the evolving economic landscape, its strategic investments in technology and branch expansion aim to bolster its service offerings and deposit mobilisation efforts.

  Baskar Babu Ramachandran, BSE, India, Jaipur, Navi Mumbai, NSE, Suryoday Small Finance Bank