Suryoday Small Finance Bank has released its business update for the third quarter of fiscal year 2025, showing continued growth in its loan book and deposit base. The bank’s gross advances reached ₹9,563 crore, a 26% year-on-year increase and a 2% quarter-on-quarter increase. This growth indicates strong loan demand and the bank’s successful efforts in expanding its credit portfolio.
The bank also reported an improvement in its CASA (Current Account Savings Account) ratio to 19.5% from 18.5% in the same quarter last year. A higher CASA ratio is generally favorable for banks as it signifies a lower cost of funds. This improvement suggests that Suryoday is attracting more deposits from current and savings accounts, which are cheaper than term deposits.
Key Insights:
- Strong Loan Growth: The 26% YoY growth in gross advances demonstrates Suryoday’s ability to capture the rising credit demand in the market, particularly in the small finance segment. This growth is likely driven by the bank’s focus on microfinance and lending to small and medium enterprises (SMEs).
- Improved CASA Ratio: The increase in the CASA ratio to 19.5% reflects the bank’s efforts to mobilize low-cost deposits. This improvement can contribute to better profitability and margins for Suryoday.
- Focus on Inclusive Finance: Suryoday continues to focus on financial inclusion, with its inclusive finance portfolio constituting a significant portion of its gross advances. This indicates the bank’s commitment to serving the underbanked population.
Investment Implications:
- Positive Outlook: The strong growth in advances and improving CASA ratio suggest a positive outlook for Suryoday Small Finance Bank. Investors may consider these factors as indicators of the bank’s operational and financial health.
- Growth Potential: The small finance sector in India has significant growth potential due to increasing financial inclusion and rising credit demand in rural and semi-urban areas. Suryoday, with its focus on this segment, is well-positioned to capitalize on this growth opportunity.
- Monitor Asset Quality: While the business update presents a positive picture, investors should continue to monitor the bank’s asset quality indicators, such as Gross NPA (Non-Performing Assets) and Net NPA, in the upcoming quarterly results for a complete assessment.
