KOCHI: Exactly after three years, ESAF Small Finance Bank has announced yet another loss-making quarter with the bank reporting a net loss of Rs190.07 crore for the quarter ending September 30, 2024 (Q2).
A huge provision to the tune of Rs340 crore along with an exceptional item that took off another Rs58 crore, together played the ‘villain’ this time to land the bank in its record quarterly loss.
“ESAF Bank may have also entered a rare group of banks that posted a quarterly loss despite most banks in India having displayed resilience and followed a sustainable growth path,” said an analyst while speaking to businessbenchmark.news.
ESAF Bank had reported its previous quarterly net loss of Rs91.63 crore three years ago, for the quarter ending September 30, 2021.
While ESAF Bank earned a net profit of Rs140.12 crore for the second quarter a year ago (FY24), the immediate previous quarter ending June 30 – Q1, FY25, witnessed a profit after tax of Rs62.77 crore.
Large NPA
Large NPA continues raise the spectre of a potential risk and challenges for the bank. Gross NPA at Rs1,279.33 crore has grown by more than three times over the last one year.
At 6.98 per cent, gross NPA may keep staring at the bank for a few more quarters to come. Net NPA has also grown by close to three times year on year, to Rs524.94 crore, but has de-grown by about Rs60 crore sequentially, though still stays at a not-so-comfortable 2.98 per cent as of September end, 2024.
Secured loans
The bank said its secured loan disbursements surged by 92 per cent YoY, reaching Rs5,631 crore in the first half of FY25, up from Rs2,937 crore in the same period last year.
The secured asset portfolio grew from 27 per cent in H1 FY24 to 38 per cent in H1 FY25. Gold loan portfolios also saw a notable increase of 59 per cent YoY, reaching Rs3,742 crore in H1 FY25 from Rs2,352 crore a year ago.
The current account and savings account (CASA) deposits showed robust growth, increasing by 69.3 per cent YoY to Rs5,319 crore in Q2 FY25, up from Rs3,142 crore in Q2 FY24, taking the CASA ratio to 24.6 per cent from 18.04 per cent.
The bank also maintained a healthy capital adequacy ratio (CAR) above 23 per cent, which shows the bank enjoys a comfortable headroom for growth in future.
CEO speaks
The MD & CEO of the bank, K. Paul Thomas, highlighted the 17 per cent YoY growth achieved by the bank in total business and a strong rise in CASA deposits, with 92 per cent of deposits being retail, underscoring the bank’s financial stability.
He expressed confidence in improving asset quality over the next two to three quarters, emphasising ESAF’s commitment to responsible lending. He also noted ESAF’s focus on technological advancements to drive operational efficiency and enhance customer experience.
