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    Suryoday Small Finance Bank Q1 FY27 earnings call

    SURYODAY
    Financial Services·24 Jul 2026
    Management Summary

    Suryoday Small Finance Bank Limited reported a quarter of continued progress in Q1 FY27, with strong growth in both advances and deposits. Asset quality showed improvement with reduced slippages and healthy collection efficiencies, particularly after adjusting for CGFMU receivables. The bank is strategically shifting towards individual loans and expanding its digital footprint, while managing cost of funds and capital adequacy.

    Highlights

    5

    • Gross advances registered a year-on-year growth of 32.5% to INR 14,376 crores.

    • Deposit base grew 29.4% year-on-year to INR 14,634 crores, with retail deposits comprising 87.3%.

    • Adjusted GNPA stood at 2.9% and NNPA at 0.3% after accounting for INR 134 crores receivable under the CGFMU scheme.

    • Overall slippages improved to INR 92 crores from INR 106 crores QoQ, with MFI slippages at INR 53 crores from INR 73 crores QoQ.

    • Digital CLOU business generated INR 18 crores in convenience fee income for the quarter.

    Concerns

    2

    • Vehicle finance PAR increased to 11.5% from 10.1% last quarter, attributed to fuel prices and load availability issues.

    • Yield on non-NPA advances declined to 16.1% from 17.2% due to a 4% reduction in the share of IF business.

    Key financials

    Single quarter

    06 metrics
    1. 01Gross Advances₹14,376 Cr+32.5%YoY
    2. 02Deposit Base₹14,634 Cr+29.4%YoY
    3. 03GNPA6.5%
    4. 04NNPA1.2%
    5. 05CASA Ratio21%

    Guidance & targets

    20
    CategoryTargetPriority
    Profitability
    ROE
    1.3% to 1.4%
    		High
    Profitability
    ROE (long-term improvement)
    0.5% to 1% year-on-year
    		Medium
    Profitability
    NIM
    stable at current level
    		High
    Profitability
    ROA
    1.6%
    		High
    Profitability
    PAT
    INR 300 crores
    		High
    Profitability
    PAT (per quarter)
    INR 75 crores
    		High
    Asset Quality
    Credit Cost
    0.8% to 1.00%
    		High
    Asset Quality
    Remaining CGFMU claims
    INR 13-15 crores
    		High
    Other Income
    PSL Income
    INR 10-15 crores
    		High
    Other Income
    PSL Income
    INR 20 crores
    		High
    Cost of Funds
    Cost of Fund
    7.5%
    		High
    Cost of Funds
    Cost of funds
    around same level
    		High
    Yield
    Yield on non-NPA advances
    back to ~17%
    		Medium
    Asset Mix
    JLG exposure
    reduce and move to individual loans
    		High
    Operating Efficiency
    Opex
    67% to 70%
    		High
    Branch Expansion
    Number of branches
    add ~50 branches
    		Medium
    Business Mix
    Mortgage business presence
    40% to 45% of branches
    		High
    Business Mix
    Micro banking mix
    48-52
    		High
    Growth
    Overall Growth
    30%
    		High
    Deposit Mix
    CASA Ratio
    maintain at 21%
    		High

    What to watch in Q2 FY27

    5

    PSL Income

    Next 2 quarters (Q2, Q3 FY27)
    CurrentINR 46 crores (Q1 FY27)
    TargetINR 10-15 crores

    Why it matters

    Q1 PSL income was a significant one-off📎; its normalization will impact other income and overall profitability.

    So the other income this time you had about INR90-odd crores on account of PSL income. I think for the next 2 quarters, you can expect that our PSL income will be around INR10 crores to INR15 crores.

    Risks & concerns

    4
    RiskSeverity

    Competitive pressure in small finance banking

    Competition will be intense, requiring digital play for customer experience. — Management acknowledged

    medium

    Microfinance cycle volatility

    Bank remains cautious and prudent on growth, weeding out customers with poor track records. — Management acknowledged

    medium

    Elevated PAR in vehicle finance segment

    PAR at 11.5% due to fuel price increases and load availability issues, expected to settle down this quarter. — Both acknowledged

    medium

    Challenges in maintaining cost of funds and CASA ratio

    Maintaining cost of funds at ~7.5% and CASA ratio at 21% will be challenging and requires focused efforts. — Management acknowledged

    medium

    Q&A highlights

    8

    “Our key focus continues on strengthening the inclusive finance portfolio, which is our backbone and our core focus area. We have moved, as you know, to individual loans... The risks, obviously, are in terms of as I said, we continue to be cautious while the microfinance cycle has turned... The competition will be intense and that is where probably our digital play will be coming to play in creating that customer experience.”

    Provides insight into the bank's strategic focus on individual loans and digital initiatives, while acknowledging key risks like the microfinance cycle and competitive intensity.

    asked by Sucrit D. Patil

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 FY27 Performance Overview and Strategic Focus

    Suryoday Small Finance Bank reported a period of continued progress in Q1 FY27, building on stabilization achieved in previous quarters. Gross advances grew 32.5% year-on-year to INR 14,376 crores, while the deposit base expanded 29.4% year-on-year to INR 14,634 crores. The bank maintains a disciplined approach towards growth, portfolio quality, and sustainable profitability, with a strategic focus on strengthening its inclusive finance portfolio and transitioning to individual loans.

    02

    Asset Quality and Collections Improvement

    The bank's asset quality showed notable improvement, with overall slippages reducing from INR 106 crores to INR 92 crores quarter-on-quarter, and MFI slippages specifically improving from INR 73 crores to INR 53 crores. GNPA stood at 6.5% and NNPA at 1.2%, which adjusted significantly to 2.9% and 0.3% respectively after accounting for INR 134 crores receivable under the CGFMU scheme. Current bucket collection efficiencies for inclusive finance remained healthy at 99.2% overall and 99.4% for recent portfolios, reflecting strengthened underwriting and collection frameworks.

    03

    Deposit Franchise and Funding Strategy

    Retail deposits continue to be a key focus, comprising 87.3% of the total deposit base as of June 2026. The CASA ratio stood at 21%, which the management aims to maintain. The cost of funds reduced by approximately INR 0.08 quarter-on-quarter, with the SA cost of funds at 5.5% and fixed deposit costs at 8.1%. The bank expects the cost of funds to be around 7.5% for the rest of the year, with NIMs remaining stable at current levels.

    04

    Digital Initiatives and Customer Engagement

    Digital channels are gaining significant traction, with the CLOU business generating INR 18 crores in convenience fee income for the quarter, against INR 13 crores in related expenses. The bank's phygital customer base, acquired through digital deposits and other digital products, now stands at approximately 1 million customers. Credit on UPI customers crossed 9 lakhs, demonstrating a seamless onboarding journey and higher customer engagement through a product-driven approach.

    05

    Loan Book Growth and Mix Evolution

    The bank is strategically transitioning from the traditional JLG model towards individual loans and Vikas Loan, with individual loans now contributing around 80% of monthly onboarding. On the secured retail asset side, commercial vehicles and mortgages showed healthy momentum. The yield on non-NPA advances was 16.1%, a decrease from 17.2% due to a 4% reduction in the share of inclusive finance business, but is expected to return to around 17% going forward⏳.

    06

    Outlook and Capital Planning

    Suryoday Small Finance Bank reaffirmed its FY27 ROE guidance of 1.3% to 1.4% and credit cost guidance of 0.8% to 1.00%. The bank anticipates a quarterly PAT of INR 75 crores, contributing to an FY27 PAT of INR 300 crores. Management expects PSL income to normalize to INR 10-15 crores for the next two quarters and INR 20 crores for Q4. The bank's capital adequacy ratio stands at 20%, and it is actively evaluating options to raise fresh Tier 2 capital (expiring next year) and considering the right time to raise Tier 1 capital.

    This is an AI-generated summary of a publicly available earnings call transcript.