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23% YoY growth in Net Interest Income and Higher YoY provisions led Equitas Small Finance to post Decent Q4 FY22 results. PAT up 6% YoY, at 120 crores in Q4 FY22 | Q4FY22 Result Analysis

23% YoY growth in Net Interest Income and Higher YoY provisions led Equitas Small Finance to post Decent Q4 FY22 results. PAT up 6% YoY, at 120 crores in Q4 FY22 | Q4FY22 Result Analysis & Conference Call Highlights

Published on 05 May 2022 .Views 23 .Comments 0

Indian Economy Overview:

GST collections continued to touch record level month after month.
Inflation remains at elevated levels due to higher demand and supply side issues.
RBI intervened to raise REPO rate by 40 bps and CRR by 50 bps.

Business Overview:

15% of Equitas Book is linked to repo rate, remaining are fixed rate.
Average asset duration is only two and half years.
Credit cost for Non restructured book is at 1.25% annualized for Q4 FY22.
Credit cost for FY23 would be around 1.5% and further decrease to 1.1 to 1.2% which is regular level.
Actual growth of company is close to guided level which is 15%.
Expected growth is at 30% for FY23.
7% of savings balance came from digital accounts.
Working on creating a platform for acquiring, servicing and cross selling wider range of products to customers.

Financial Highlights:

Advances grew by 15% YoY and 5% Q-o-Q.
Disbursements are at 1390 crores in Q4 FY22 which is all time high.
Restructured book is at 1500 crores out of which 611 crores are in 1 to 90 dpd.
Out of 611 crores, 37 crores are non paid EMI’s from customers in 3 months.
45% of 37 crores got paid after redeploying staff into sales.
Small business loans witnessed highest growth with 400 crores because of redeploying staff back.
Vehicle finance saw highest disbursements ever of 950 crores in Q4 FY22.
In micro finance x bucket efficiencies are at 99% in march 2022 with some weakness in districts of erode and Thirpur.
Affordable housing finance has now expanded to 29 branches.
Business in Tamil Nadu and Karnataka has started, business in Andhra Pradesh and Telangana will be started soon.
CASA ratio is at 52%.
Retail book contribution to CASA is 90%.

Profit and Loss Highlights:

NII is at 552 crores in Q4 FY22 grew by 23% YoY from 449 crores in Q4 FY21.
Other Income is at 148 crores in Q4 FY22 compared to 178 crores in Q4 FY21.
Other Income is reduced in Q4 FY22 because of lower PSLC fee income and treasury income.
Net Income grew by 12% YoY to 701 crores in Q4 FY22 compared to 627 crores in Q4 FY21.
Total Operating Expenditure is at 375 crores in Q4 FY22 compared to 335 crores in Q4 FY21.
Employee Expenses reduced to 209 crores in Q4 FY22 from 240 crores in Q4 FY21.
One time reversal of excess provision for leave salary is 30.63 crores.
Cost of Income is at 61.5 crores for Q4 FY22 without considering one time reversal of excess provisions.
Reported cost of income is 56.85 crores for Q4 FY22.
Cost of Funds increased to 6.2% in Q4 FY22 grew by 100 bps from 7.2% in Q4 FY21.
PPOP is at 284 crores in Q4 FY22 compared to 250 crores in Q4 FY21 grew by 14% YoY.
PAT is at 120 crores in Q4 FY22 compared to 113 crores in Q4 FY21.
PPOP as percentage of Assets increased to 4.35% sequentially from 3.52%.

Asset Quality:

Outstanding restructured pool stands at 1500 crores.
Carrying a provision of 593 crores which includes PA provision of 358 crores and standard provisions of 235 crores.
Gross NPA is at 4.06% in Q4 FY22 compared to 4.39% in Q3 FY22 and 3.59% in Q4 FY21.
Net NPA is at 2.37% in Q4 FY22 compared to 2.38% in Q3 FY22 and 1.52% in Q4 FYH21.
PCR is at 42.73%.
Credit cost is at 2.45% in Q4 FY22, Non RSL credit cost is at 1.26% in Q4 FY22.
Addition of 409 crores as fresh slippages in Q4 FY22, 70% of these are from restructured pool.
Bank has raised 550 crores of capital in Q4 FY22.
CRR is at 25.16% as of march 31, 2022 with tier 1 at 24.53% and tier 2 at 0.63%.
LCR improved sharply because of focus on improving quality of deposits.  

Digital Highlights:

1.26 lac new Fastags issued.
Over 20 lakh new cards issued.
13.8 lac NiyoX accounts opened.
Getting the demographic dividends of new generation, customers started preferring the company.
With focus on customer engagement this year 60% of book is primary or active.
PPP top lane and PPP bottom lane with key focus on digital and physical is leveraging towards customer life cycle management and engagement.


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