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    Suryoday Small Finance Bank Q4 FY26 earnings call

    SURYODAY
    Financial Services·8 May 2026
    Management Summary

    Suryoday Small Finance Bank Limited reported a strong Q4 and FY26, with net total income growing 10.2% and PAT increasing to ₹152 crores. The bank saw robust growth in deposits (32.3% YoY) and asset portfolios like commercial vehicle finance (36% YoY) and mortgages (38% YoY). Asset quality showed improvement with reduced slippages in inclusive finance, and capital adequacy remains strong at 20.5%. However, the bank acknowledges a high cost-to-income ratio and hardening cost of funds, while managing localized stress in certain asset segments.

    Highlights

    9

    • Net total income for FY26 increased by 10.2% YoY from ₹1,323 crores to ₹1,458 crores.

    • Profit after tax for FY26 stood at ₹152 crores, up from ₹115 crores last year.

    • Deposits expanded to ₹13,994 crores as of March 2026, reflecting a 32.3% YoY growth from ₹10,580 crores.

    • Commercial vehicle finance portfolio grew 36% YoY from ₹1,336 crores to ₹1,819 crores.

    • Mortgage book grew 38% YoY from ₹2,187 crores to ₹3,013 crores.

    • Capital adequacy ratio maintained at 20.5%, well above the regulatory requirement of 15%.

    • Inclusive finance portfolio slippages reduced meaningfully to ₹74 crores in Q4 FY26 from ₹116 crores in Q3 FY26.

    • Collection efficiency for inclusive finance portfolio improved to 99.7%.

    • Digital channels contribute ~50% of net incremental deposit flows.

    Concerns

    4

    • GNPA ratio stood at 6.5% as of March 2026.

    • Cost to income ratio was 73% for FY26, which management acknowledges is still very high.

    • Cost of funds has hardened, making it increasingly difficult to raise money, with a rush for deposits among SFBs and midsized banks.

    • Localized stress observed in specific segments like Odisha (CV portfolio) and Karnataka (old mortgage/MHL portfolio).

    What Changed1

    vs Q1 FY27

    Guidance items20 → 11 (-9)
    Key financials

    Metrics

    12

    Periods

    2

    Headline

    11
    • Net Total Income
      ₹1,458 Cr
      YoY+10.2%
    • Profit After Tax
      ₹152 Cr
      YoY+32.2%
    • Deposits
      ₹13,994 Cr
      YoY+32.3%
    • Commercial Vehicle Finance Portfolio
      ₹1,819 Cr
      YoY+36%
    • Mortgage Book
      ₹3,013 Cr
      YoY+38%

    Q4 FY26

    1
    • Inclusive Finance Slippages
      ₹74 Cr
      QoQ-36.2%

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Liquidity disclosed

    The bank maintains a strong Capital Adequacy Ratio (CAR) of 20.5%, well above the regulatory requirement of 15%, providing adequate headroom for future growth. Management also noted that they have space for Tier 2 capital and are evaluating fundraise options.

    Guidance & targets

    11
    CategoryTargetPriority
    Profitability
    Return on Assets (ROA)
    1.2% for Q1 FY27, gradually increasing to 1.6% by Q4 FY27
    		High
    Profitability
    Profit After Tax (PAT)
    >₹300 crores
    		High
    Profitability
    Net Interest Margin (NIM)
    8-9% range bound
    		High
    Asset Quality
    Slippages (Banking Book)
    ₹75-90 crores per quarter
    		High
    Asset Quality
    CGFMU Claims
    ₹450-550 crores
    		High
    Asset Quality
    Gross Non-Performing Assets (GNPA) Ratio
    around 3%
    		Medium
    Asset Quality
    Credit Cost
    ~1%
    		High
    Asset Quality
    Credit Cost
    70-80 bps
    		High
    Efficiency
    Cost-to-Income Ratio
    67-68%, below 70%
    		High
    Expenses
    CGFMU Cover Spend
    ₹100-110 crores
    		High
    Growth
    Asset Size Growth
    20-30%
    		High

    What to watch in Q1 FY27

    5

    CGFMU Claim Submission

    Q1 or Q2 FY27 (within 1-3 months)
    CurrentNot yet submitted for FY27
    TargetSubmission of first cohort claim

    Why it matters

    Timely submission and realization of CGFMU claims are crucial for reducing reported GNPA and managing asset quality.

    So currently, we are in a reasonably kind of comfortable situation that we will figure it out whether it has to be Q1 or Q2, where we can get a reasonably higher claim because the claim is once in a year for a particular cohort.

    Risks & concerns

    4
    RiskSeverity

    Hardening Cost of Funds

    Cost of funds have hardened, making it increasingly difficult to raise money, with a rush for deposits among SFBs and midsized banks. — Management acknowledged

    medium

    Localized Asset Quality Stress (CV & Mortgage/MHL)

    Localized stress observed in specific segments like Odisha (CV portfolio) and Karnataka (old mortgage/MHL portfolio), which management is actively addressing. — Management acknowledged

    medium

    Potential Impact of Macroeconomic Headwinds (Monsoon, Crude Prices)

    While no immediate impact is seen due to low-income customer base, potential impact on commercial vehicle portfolio if diesel prices increase significantly (>10-15%) is being monitored. — Management acknowledged

    low

    High Cost-to-Income Ratio

    The cost-to-income ratio stood at 73% for FY26, which management considers very high, with a target to bring it down to 67-68% for the coming year. — Management acknowledged

    medium

    Q&A highlights

    7

    “No. As we exit Q4 and move to Q1, my paying book in Q1 will be much higher than Q4. And the second thing is that Q1 is also typically when most of the PSL sales occur, and that will provide an uptick to the income and which is the reason why we expect that we will have a higher ROA in Q1 vis-a-vis Q4.”

    Clarifies the drivers for expected ROA improvement in Q1 despite Q4 being strong, highlighting the role of paying book growth and PSL sales.

    asked by Ankur Kumar

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Financial Performance in FY26

    Suryoday Small Finance Bank reported a robust financial year, with net total income for FY26 increasing by 10.2% year-on-year to ₹1,458 crores from ₹1,323 crores. Profit after tax for the year significantly grew to ₹152 crores, compared to ₹115 crores in the previous year. The bank maintained a strong capital adequacy ratio of 20.5%, comfortably above the regulatory requirement of 15%, providing a solid foundation for future growth.

    02

    Robust Growth in Deposits and Asset Portfolios

    The bank demonstrated strong growth in its liability and asset books. Deposits expanded to ₹13,994 crores as of March 2026, marking a 32.3% year-on-year growth from ₹10,580 crores, with retail deposits contributing 86% and the CASA ratio standing at 22.6%. On the asset side, the commercial vehicle finance portfolio grew 36% YoY to ₹1,819 crores, and the mortgage book, including micro home loans, expanded 38% YoY to ₹3,013 crores.

    03

    Improving Asset Quality and CGFMU Coverage

    Asset quality showed signs of stabilization, with inclusive finance portfolio slippages reducing meaningfully to ₹74 crores in Q4 FY26 from ₹116 crores in the previous quarter. Collection efficiency for this portfolio improved to 99.7%. The bank's overall GNPA ratio stood at 6.5% as of March 2026, with NNPA at ₹542 crores. Crucially, 99% of the inclusive finance portfolio remains covered under the CGFMU scheme, which has mitigated approximately ₹650 crores in P&L impact.

    04

    Strategic Shift Towards Individual Lending and Digital Adoption

    Suryoday Bank's strategic shift from the JLG model to individual lending continues to gain traction, with 75% of its inclusive finance portfolio now comprising individual loans, growing at 40-45% YoY. Digital channels are becoming a key growth driver, contributing approximately 50% of net incremental deposit flows at significantly lower acquisition costs. The credit on UPI product is also seeing strong traction, with over 90% of onboarded customers having CIBIL scores above 725.

    05

    Outlook and Guidance for FY27

    For FY27, the bank is targeting an ROA of 1.2% in Q1, gradually increasing to 1.6% by Q4, and aims to reduce its cost-to-income ratio to 67-68%, below 70%. Slippages for the banking book are targeted at ₹75-90 crores per quarter, a reduction from ₹106 crores in Q4 FY26. The bank expects to claim ₹450-550 crores under the CGFMU scheme in the current financial year, with credit costs projected to be around 1% for FY27.

    06

    Challenges in Funding Environment and Localized Stress

    Management acknowledged a hardening cost of funds, making deposit mobilization increasingly competitive among SFBs and midsized banks, though NIMs are expected to remain range-bound at 8-9%. Localized asset quality stress was noted in the Odisha commercial vehicle portfolio and older mortgage/MHL portfolios in Karnataka, with management actively working on resolutions and expecting 'par numbers' to come down in the next two quarters.

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