Suryoday Small Finance Bank reported healthy loan and deposit growth in Q3 & 9M FY26, with gross advances up 24.3% and deposits up 32.5% YoY. However, profitability metrics like Net Interest Income and Profit Before Tax saw declines, and the cost-to-income ratio increased. Asset quality remains a focus, with GNPA at 6.6% and significant CGFMU cover. Management expressed confidence in improving efficiency and profitability in the coming quarters, targeting a sub-65% CTI and 1.1% ROA by Q4 FY26.
vs Q4 FY26
| Metric | Value | YoY |
|---|---|---|
| Gross Advances | ₹12K Cr | +24.3% YoY |
| Deposit Base | ₹13K Cr | +32.5% YoY |
| GNPA Ratio | 6.6% | — |
| NNPA | ₹501 Cr | — |
| CASA Ratio | 21.2% | — |
| Net Total Income (9M FY26) | ₹1.1K Cr | +3.2% YoY |
| Metric | Latest | Trend |
|---|---|---|
| Gross Advances(crores) | 11885 | |
| Deposit Base(crores) | 12865 | |
| CASA Ratio | 22.6% | |
| GNPA | 864% | |
| NNPA | 542% | |
| GNPA Ratio | 6.5% |
| Category | Headline | |
|---|---|---|
Liquidity | Liquidity disclosed The Bank continues to maintain strong capital adequacy ratio of 21.9%, well above the regulatory requirement of 15%, providing adequate headroom for future growth. |
| Category | Target | Priority |
|---|---|---|
| Efficiency | Cost-to-income ratio→below 65% | High |
| Asset Quality | Steady-state credit cost→not more than 1% | High |
| Asset Quality | Overall slippages→about Rs. 100 crores | High |
| Asset Quality | MFI slippages→around 75 to 80 crores | Medium |
| Asset Quality | Retail asset slippages→20-odd crores or less | Medium |
| CGFMU Claims | Largest chunk of CGFMU claims→Rs. 200 crores to Rs. 300 crores | High |
| Profitability | NIM trajectory→around 7.5% to 8% | High |
| Profitability | ROA→closer to 1.1% | High |
| Profitability | ROE→around 10% | High |
| Digital Adoption | Credit on UPI active customers→10 lakh customers | High |
| Digital Adoption | Credit on UPI AUM→50 to 60 crores | Medium |
| # | Metric | |
|---|---|---|
| 01 | Cost-to-income ratio | |
| 02 | Steady-state credit cost | |
| 03 | Overall slippages | |
| 04 | ROA and ROE | |
| 05 | CGFMU claims realization |
| Severity | Risk |
|---|---|
medium | Microfinance industry stress The broader microfinance industry continues to navigate through a phase of tighter underwriting and asset quality normalization, though visible signs of civilization and growth are emerging. Management |
medium | GNPA/NNPA levels and impact on P&L GNPA ratio stood at 6.6% and NNPA at ₹501 crores; however, the CGFMU cover mitigates the direct impact on capital and P&L. Management |
medium | Shareholder wealth creation Analyst noted that the bank's growth has not reflected in shareholder wealth creation, which management acknowledged as an area where they 'did not do justice' in the last five years. Analyst |
low | Operational execution/management bandwidth Analyst questioned if operational aspects or management bandwidth were lagging, to which management responded by asserting strong alignment and confidence in future performance. Analyst |
Suryoday Small Finance Bank reported healthy growth in Q3 & 9M FY26, with gross advances increasing 24.3% YoY to ₹11,885 crores as of December 31, 2025. Disbursements (excluding Supply Chain Finance) for the nine months ended December 25, 2025, stood at ₹6,230 crores, marking a 30.2% increase from the previous year. The commercial vehicle portfolio grew 35% YoY to ₹1,609 crores, and the mortgage book expanded 39% YoY to ₹2,778 crores, indicating strong momentum across key retail segments.
The bank's GNPA ratio was 6.6% as of December 25, 2025, with NNPA at ₹501 crores, of which ₹467 crores are covered under the CGFMU scheme. Slippages in Q3 FY26 reduced to ₹155 crores from ₹200 crores in Q2, with MFI contributing ₹116 crores and retail ₹39 crores. Management expects overall slippages to further reduce to about ₹100 crores in Q4. The CGFMU cover continues to safeguard the balance sheet, with 100% claim rate on eligible portfolios since inception, and a significant claim of ₹200-300 crores expected in Q1 FY27.
The deposit base grew 32.5% YoY to ₹12,865 crores as of December 25, 2025, with retail deposits now constituting 87% of the total. The CASA ratio stood at 21.2%, reflecting improving deposit granularity. Digital channels are a key growth driver, contributing nearly 30% of incremental deposit accretion. The bank's customer base expanded to nearly 3.7 million, with strong early traction in credit on UPI, aiming for 10 lakh active customers by March and an AUM of ₹50-60 crores soon.
For 9M FY26, net total income increased 3.2% YoY to ₹1,052 crores, but net interest income decreased from ₹862 crores to ₹782 crores. Pre-provision operating profit also declined from ₹343 crores to ₹277 crores. The cost of funds remained stable at 7.7%, but the cost-to-income ratio increased to 73.6% for 9M FY26 from 66.4% in the prior year. Consequently, profit before tax for the period stood at ₹102.2 crores, down from ₹148.7 crores last year.
Management is targeting a cost-to-income ratio below 65% in the next financial year, driven by resolution of the non-paying book. They expect steady-state credit costs not to exceed 1%. NIM is projected to be in the range of 7.5% to 8% in the next couple of quarters. For Q4 FY26, the bank aims for an ROA of 1.1% and an ROE of 10%, indicating confidence in improved profitability as asset quality stabilizes and operational efficiencies are realized. The strategic shift towards individual lending and granular retail assets continues to gain traction.