Equitas Small Finance Bank Q4 Results Review - Business Momentum Robust; RoA Improves Sharply: Motilal Oswal

Motilal Oswal Report

Equitas Small Finance Bank Ltd. reported 59% YoY growth in profit after tax to Rs 1.9 billion (7% beat) in Q4 FY23, driven by healthy net interest income and other income, resulting in a 26% beat in pre-provision operating profit. The bank utilised higher other income to increase its provision coverage to 56%. Margin expanded 9 bps QoQ to 9.1%.

Business growth picked up and assets under management grew 12% QoQ to Rs 279 billion, led by healthy traction in most segments. Non banking financial company posted a strong growth of 36% QoQ.

The momentum in deposits remained intact with 9% growth QoQ, though current account and saving account moderated to 42.3% (versus 46.2% in Q3 FY23).

On the asset quality front, slippages declined owing to healthy recoveries/ upgrades and write-offs, resulting in an improvement in gross non-performing asset/net non-performing asset ratios by 87 bps/61 bps QoQ to 2.8%/1.2%. Restructured book stood at Rs 2.3 billion (~1% of loans) versus Rs 15 billion in FY22.

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