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AUM (Assets Under Management): INR 7,715 crores, 33% YoY growth, 8% QoQ growth.
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Branch Count: Added 6 branches, total of 192 branches as of September 2024.
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Borrowing Cost: 9.32% for Q2 FY25, similar to Q2 FY24.
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Yield and Spread: Yield at 17.69%, Spread at 8.7% for the quarter.
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Return on Average AUM: 4.56% for the quarter.
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Return on Average Equity: Improved to 12.67%.
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Gross NPA: Increased by 9 basis points to 2.69%.
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Credit Cost: Slightly above 1%, at 1.03% for the quarter.
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Provision Coverage Ratio (PCR): 40.17% as of September 2024.
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Capital Adequacy Ratio: 38.6%.
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Tangible Net Worth: INR 2,707 crores as of September 2024.
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Profit After Tax: INR 84 crores, 60% YoY growth, 7% QoQ growth.
Release Date: October 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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SBFC Finance Ltd (BOM:543959) reported a 33% year-over-year growth in assets under management (AUM), reaching INR 7,715 crores.
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The company has maintained a stable cost of borrowing at 9.32%, despite rising market rates.
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Return on average AUM for the quarter was 4.56%, with return on average equity improving to 12.67%.
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SBFC Finance Ltd added six new branches, increasing the total branch count to 192, indicating expansion and growth.
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The company has managed to increase its spreads by 14 basis points, even as leverage increased, demonstrating effective financial management.
Negative Points
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The credit cycle is presenting challenges, with credit costs at the upper end of the guided range of 8,200 basis points.
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Finding lendable customers has become more challenging due to tightened credit underwriting since February.
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The company's gross non-performing assets (GNPA) increased slightly by nine basis points to 2.69%.
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There is a noted difficulty in bringing back customers who have slipped into delinquency, reflecting challenges in collections.
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The regulatory environment is demanding, with increased compliance requirements impacting operational processes.
Q & A Highlights
Q: Are there any signs of stress in unsecured business loans, particularly in the 5 to 15 lakh ticket size? A: Aseem Dhru, MD & CEO, clarified that SBFC Finance does not engage in unsecured lending, so this concern does not apply to them.
Q: Can you provide insights on the bounce rate for this quarter and its trend over the last few quarters? A: Aseem Dhru, MD & CEO, explained that the bounce rate has remained steady, with no significant increase. However, once a customer slips, it has become more challenging to bring them back to normalcy, although nothing material has changed in the bounce rate itself.