This article first appeared on GuruFocus .
Release Date: July 24, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Suryoday Small Finance Bank Ltd ( BOM:543279 ) reported a strong year-on-year growth of 32.5% in gross advances, reaching Rs. 14,376 crores.
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The bank's deposit base grew by 29.4% year-on-year, totaling Rs. 14,634 crores, with retail deposits making up 87.3% of the total.
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The bank's CASA ratio stood at 21%, with a focus on increasing granular CASA in the coming quarters.
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The current bucket collection efficiency for the inclusive finance portfolio was impressive at 99.2%, indicating strong borrower behavior.
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Digital initiatives have been successful, with a digital customer base of approximately 1 million and digital deposits amounting to Rs. 2,222 crores.
Negative Points
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The bank's gross non-performing assets (GNPA) stood at 6.5%, which is relatively high, although adjusted GNPA is 2.9% after accounting for CGFMU receivables.
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The yield on non-NPA advances decreased from 17.2% to 16.1%, partly due to a reduction in the share of the inclusive finance business.
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There is pressure on the cost of funds, particularly in fixed deposits, which have not decreased significantly.
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The bank's reliance on PSL income, which contributed significantly to other income this quarter, may not be sustainable in the coming quarters.
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The commercial vehicle finance portfolio showed elevated PAR levels due to external factors like fuel prices and load availability, indicating potential stress.
Q & A Highlights
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Q: What are the top execution priorities for Suryoday Small Finance Bank in the coming quarters, and what risks do you foresee in customer demand or competitive pressure? A: Our focus is on strengthening the inclusive finance portfolio and transitioning to individual loans for better customer engagement. We are also concentrating on secured assets like commercial vehicles and mortgages. Digital channels are crucial, with a focus on digital deposits and UPI credit lines. The main risks include cautious growth in the microfinance sector and intense competition, which we plan to manage through digital customer experience enhancements. (Respondent: MD and CEO)
Q: From a financial perspective, what key risks or challenges do you anticipate, and how are you managing margins and cash flow? A: Our monthly slippages are under control, and we are focusing on building our deposit engine and tapping refinancing lines. The improvement in our MFI book has reopened the IBPC market for us, allowing us to explore various funding options. Our focus will be on maintaining a balance between loan demand and deposit growth. (Respondent: CFO)
Q: What is the expected steady-state other income for FY27, and what is the credit cost guidance? A: The other income this quarter includes a significant PSL income component. For the next two quarters, PSL income is expected to be around 10 to 15 crores, with Q4 potentially reaching 20 crores. Our credit cost guidance remains between 0.8% to 1% for the year. (Respondent: CFO)
Q: How is the transition from the JLG model to individual lending progressing, and are there any stress indicators in the JLG model? A: We are moving away from the JLG model towards individual loans, which now account for 80% of our monthly onboarding. The JLG model is not showing significant stress, and market conditions have improved over the past 6 to 8 months. We plan to continue reducing JLG exposure. (Respondent: Head of Retail Banking)
Q: What are the growth drivers for the secured lending segment, and how do you plan to expand without significant branch additions? A: We plan to add 20 to 50 branches in the coming quarters, focusing on expanding micro mortgages and commercial vehicles to existing locations. Our strategy includes leveraging existing branches for retail secured products and expanding our geographical presence. We expect the secured business to maintain its current growth momentum. (Respondent: MD and CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
