Suryoday Small Finance Bank is targeting a net interest margin of 9-10% in 2022-23, its managing director and chief executive Baskar Babu Ramachandran said.
A net interest margin is a key source of income for a bank or financial institution as it shows the difference between interest earned and paid to lenders such as depositors.
The Mumbai-based small financier announced its results on Friday, with its net interest margin rising to 9.2% for the July-September quarter from 9.1% a year ago. Its net interest income increased by 19.5% year-on-year (YoY) to Rs 175.9 crore.
Suryoday Small Finance Bank’s gross advances increased by 20.3% year-on-year to Rs 5,378 crore as of September 30. Going forward, the small financier is aiming for 25-30% year-on-year loan growth and 30-40% year-on-year deposit growth in 2022-23. .
To put things into perspective, micro-finance loans constitute 64.4% of the lender’s total advance book. The secured loan portfolio includes affordable loans for housing, micro-enterprises and commercial vehicles.
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In addition to this, the small financier is currently testing its two-wheeled loans and the average note size of these is expected to be Rs 50,000-1 lakh.
“We see great scope in extending pre-approved loans for two-wheelers to our existing micro-finance clients in specific geographies,” Ramachandran said.
“We aim to provide a customer experience where the lady of the home who wants to buy a two-wheeler loan does not have to go to a two-wheeler dealership and hand over paperwork. It’s a pre-loan. approved,” he said. The small financier will also pilot its secured small commercial loans in January-March. It will basically be a home loan with an average amount of Rs 3-10 lakh.
Overall, the bank wants to increase its secured lending to 50-55% of the overall portfolio by 2024-25.
Ramachandran expects mortgages, secured commercial loans, small mortgages, home loans and commercial vehicle loans to make up 90% of its secured lending.
The small financier’s total deposits increased by 34.5% year-on-year to reach Rs 4,207 crore as of September 30. Like its peers, Suryoday Small Finance Bank’s deposit growth outpaced that of loans. Specifically, personal deposits accounted for 72% of total deposits.
“The ideal retail deposit mix should be 80%, but we agree with 70%. Mobilizing deposits is a bit more difficult in the current environment. Most of our wholesale deposits are non-refundable in nature,” Ramachandran said.
The small financier is also counting on its partnership with Fino Payments Bank to build up its term deposit base. Ramachandran expects 10% of the small financier’s global deposits to be mobilized through this partnership.
