Suryoday Small Finance Bank’s shares plunged by 11.74% in today’s trading session, falling to ₹137.69 after the bank reported a 10% decline in net profit for the second quarter of FY25. The bank’s net profit dropped to ₹45.4 crore, compared to ₹50.3 crore in the same period last year, primarily due to a significant rise in provisions.
Key Financial Highlights:
- Provisions and Contingencies: The bank set aside ₹67 crore for provisions in Q2 FY25, more than double the ₹27 crore in the year-ago quarter. This was a key factor impacting the bank’s profitability.
- Pre-provision Operating Profit: Despite the increase in provisions, Suryoday’s pre-provision operating profit grew by 34.5% year-on-year to ₹127 crore, driven by a 27.4% rise in total income to ₹555 crore.
- Net Interest Income (NII): The bank’s net interest income saw an increase of 35.7%, reaching ₹300 crore in Q2 FY25.
Asset Quality:
- Gross Non-Performing Assets (NPA): The gross NPA ratio rose to 3.03% in Q2 FY25 from 2.9% a year earlier, indicating some deterioration in asset quality.
- Net NPA: On a positive note, the net NPA improved to 0.8% from 1.4% in the previous year, reflecting better recovery efforts and management of bad loans.
Suryoday’s gross advances grew by 35% year-on-year to ₹9,360 crore, while deposits also rose significantly, showing a 38.6% increase, reaching ₹8,851 crore.
The bank’s managing director, R Baskar Babu, noted that while the industry is experiencing a challenging phase with asset quality issues, Suryoday continues to maintain healthy asset quality through prudent underwriting and robust risk management.
As of 11:17 am, the shares were trading at ₹137.69, reflecting the market’s reaction to the higher provisions and the decline in net profit.
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