Equitas SFB posts 8.4% rise in FY20 pre-tax profit, income up 22%

Equitas Small Finance Bank Ltd, a subsidiary of Equitas Holdings Ltd, has posted a growth of 8.4 per cent in profit before tax for the year ended March 31, 2020 at Rs 350.94 crore as compared to Rs 323.74 crore during the previous financial year. The SFB’s total income grew 22 per cent to Rs 2,927.8 crore during the year from Rs 2,394.83 the previous year.

The Bank had filed a revised Draft Red Herring Prospectus (DRHP) in March 2020 after addressing Sebi’s observations on its previous DRHP. It was in the process of completing the Initial Public Offer (IPO) of shares, but had to defer listing due to Covid-19 pandemic and the consequent lockdown.

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The ratio of gross NPAs to advances grew to three per cent from 2.53 per cent the previous year. The percentage of net NPA to advances rose to 1.66 per cent from 1.44 per cent a year ago.

The SFB said that the lockdown had led to significant disruption and dislocation of individuals and businesses. This impacted regular banking operations such as lending, fund-mobilisation and collections. The Bank has made a provision of Rs 99.63 crore in the period ended March 31, 2020, based on assessment of recoverability of advances, after considering the internal and external information and norms prescribed by Reserve Bank of India.
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It has granted a moratorium of three months on payment of all installments and interest falling due between March 1 and May 31, 2020 to all eligible borrowers. The full extent of Covid-19 impact on the Bank’s operations and financial metrics, including impact on provisioning on advances, will depend on government and regulatory guidelines and future developments.

Updating on the IPO plans, the company said, “Management and the Board of Directors remain committed to completing the IPO of shares in due course, once normalcy in business operations is restored.” The RBI had, on September 6, 2019, taken regulatory actions on the Bank, restricting it from opening new branches, apart from freezing the remuneration of its MD and CEO at the current level. However, the SFB later obtained special approval of the regulator to open 240 outlets.

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