Equitas SFB- Credit Growth Recovery Coupled With Lower Credit Cost To Drive ~2% RoA By FY24E: ICICI Securities

ICICI Securities Report

In its more than five year-journey as a ‘small finance bank’, including two Covid-impacted years, Equitas Small Finance Bank Ltd. remained committed to building a scalable, sustainable and stable franchise with focus on granularity and geographic diversification.

While the journey was temporarily disrupted by the pandemic, management’s successful execution of business strategies is reflected in:

1. share of the secured book increasing to 81% in FY22 (versus 66% in FY18),

2. current account and savings account ratio at 48% in Q2 FY23,

3. average return on asset at 1.4% during FY20-FY22 on quarterly basis, and

4. calibrated lending growth (16% compound annual growth rate during FY21-FY22).

Despite high exposure to the self-employed small-ticket segment, Equitas SFB has been able to contain its peak gross non-performing loan to less than 5% and maintain steady provision coverage of ~50% during the entire Covid phase.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.