MAS Financial Services Q4 Review - Earnings Inline Despite NIM Compression, High Credit Costs: Motilal Oswal

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Motilal Oswal Report

MAS Financial Services Ltd.’s Q4 FY23 profit after tax rose 23% YoY to Rs 556 million. Net interest income grew 36% YoY to ~Rs 1.3 billion, while opex at Rs 381 million grew 30% YoY.

Pre provision operating profit rose 39% YoY to Rs 887 million. FY23 profit after tax grew 28% YoY to ~Rs 2 million (previous year: Rs 1.6 billion).

Credit costs grew 28% QoQ to Rs 182 million (our estimate: Rs 119 million). Total Covid related provisions stood at ~0.3% of on-book assets.

Q4 FY23 disbursements grew 27% YoY/12% QOQ to ~Rs 25 billion. FY23 disbursements surged 50% YoY to Rs 91.3 billion (previous year: Rs 60.8 billion).

Asset quality improved QoQ, with gross stage-III/net stage-III at 2.15%/1.5%.

In micro, small and medium enterprise and SME lending, MAS Financial Services is relatively better than its peers.

Capital adequacy and liquidity on the balance sheet remained healthy. We increase our FY25E earnings per share by ~4% to factor in higher loan growth.

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