Equitas Small Finance Bank has reported a significant decline in its net profit for the fourth quarter of the fiscal year. The bank’s profit has dropped by 80% to Rs 42 crore, compared to the same period last year. This decline is primarily attributed to the increased provisioning for bad loans and the impact of the COVID-19 pandemic on the bank’s operations.
The bank’s total income for the quarter stood at Rs 844 crore, which is a decline of 12% from the corresponding quarter last year. The net interest income (NII) also witnessed a decline of 15% to Rs 443 crore, due to the reduction in loan growth and lower yields on assets. The bank’s non-interest income, which includes fees and commissions, also decreased by 6% to Rs 143 crore.
The bank’s provisioning for bad loans has increased significantly, with a provisioning coverage ratio of 64.5%. This has resulted in a higher provision for loan losses, which has impacted the bank’s profitability. The bank’s gross non-performing assets (NPAs) stood at 4.1% of its total advances, while the net NPAs were at 2.3%.
The bank’s capital adequacy ratio (CAR) stood at 20.5%, which is well above the regulatory requirement of 15%. The bank’s return on assets (ROA) and return on equity (ROE) stood at 0.6% and 4.5%, respectively, which are lower than the industry averages.
The bank’s management has stated that the decline in profit is a one-time impact of the COVID-19 pandemic and the resulting increase in provisioning for bad loans. The bank is focused on improving its asset quality and reducing its cost of funds to improve its profitability in the coming quarters. The bank is also planning to expand its branch network and increase its digital offerings to improve its customer base and revenue growth.
Overall, Equitas Small Finance Bank’s Q4 results have been impacted by the COVID-19 pandemic and the resulting increase in provisioning for bad loans. However, the bank’s strong capital position and improved asset quality are expected to support its growth and profitability in the coming quarters. The bank’s management is focused on improving its operational efficiency and expanding its customer base to drive growth and improve its financial performance.