Baskar Babu spoke on the need to stand by customers during the pandemic and made a case for using a customer’s monthly obligations as the true measure of their indebtedness.
Suryoday Small Finance Bank (SFB) is aiming for at least 25 percent year-on-year rise in its assets under management (AUM) in the next financial year, the bank’s managing director and chief executive officer Baskar Babu R. told Moneycontrol in an interaction on March 21.
“We are looking at 25-35 percent growth in terms of asset base as credit demand has come out pretty strongly, including from existing customers. The focus will be on deepening existing relationship with current customers,” Babu said.
“We want to deepen our relationship not only through microfinance loans but also through other asset classes like two-wheeler loans which we will be introducing next fiscal, micro loans against property, or micro home loans,” he added.
The bank is witnessing good traction in the non-microfinance loan segment since the last two to three years and is aiming to expand the share of such loans to 40 percent in overall advances by the end of next fiscal against 33 percent presently. As of December end, the bank’s gross advances stood at Rs 4,872.3 crore. In comparison, AU SFB’s AUM stood at Rs 42,023 crore while Equitas SFB’s gross advances stood at Rs 19,687 crore.
Babu said the bank had mobilised around Rs 750 crore under the Reserve Bank of India’s on-tap special long-term repo operations (SLTRO) for SFBs in the October-December quarter and this should help the bank maintain its net interest margin at around 12 percent
Babu added that Suryoday SFB’s asset quality has stabilised from October onwards and there will be a slight change, 1 percent at max, in the gross non-performing assets (GNPAs) level by the end of next fiscal.
As of December end, Suryoday SFB’s GNPA ratio stood at 10.5 percent, higher than 10.2 percent as of September 30 and 0.9 percent a year earlier. The net NPA ratio was at 5.6 percent in end-December versus 0.3 percent a year earlier and 4.5 percent in the previous quarter. These figures are among the highest in the SFB universe. For instance, AU SFB’s gross and net NPA ratios stood at 2.6 percent and 1.3 percent at the end of December, respectively. Equitas SFB, on the other hand, reported its GNPAs at 4.39 percent and net NPA at 2.38 percent at the end of December.
“What we are pleased to see is that customers who have not paid in a long time are coming to the credit markets and repaying loans with existing financiers,” he said.
On the sharp correction in the lender’s share price, Babu said the bank got listed at the peak of the pandemic and was also proactive in calling out stress. He says that banking is a long-haul business and must not be judged not in a one-year period, but every year based on compliance and governance.
“The only way to address all of that is to deliver consistently strong numbers and once market realises that fundamental performance is starting to get delivered, they will probably evaluate in the right direction,” he said.
On Monday, shares of the SFB ended 0.2 percent higher on the National Stock Exchange at Rs 112.50 apiece. The SFB’s stock has corrected 61 percent since listing on March 26, 2021.
Babu did not confirm or deny reports that said non-banking financial company Clix Capital was in talks with the bank for a potential merger of the two companies.
He said Suryoday SFB will take a call on the merger based on all stakeholders’ benefit, adding, however, that everything will have to be completely crystallised before the lender announces it.
“We do not want to be distracted in our organic growth which is a good 25-30 percent engine for the next year built on a solid compliance platform. Anything that we look at has to make immense sense for all our stakeholders, not just shareholders. Key stakeholders include customers and employees,” he said.