Equitas Holdings Limited and Equitas Small Finance Bank Limited have been combined successfully. For every 100 shares held, the plan provided the Bank with 231 shares. Consequently, the current portions of around 934 million held by the holding organization have been dropped or sold, the BSE notice said. As mandated by the RBI, the bank was required to initiate a merger between Equitas Holdings and Equitas Small Finance Bank (SFB) in order to dilute the promoter’s holding.
The focus has now shifted to the bank’s performance as promoters lose their grip. Another positive is the board’s decision to extend PN Vasudevan’s three-year term as bank’s Managing Director and Chief Executive Officer (subject to RBI approval).
“EQUITASB is focusing on building a diversified loan book with small business loans (SBL), vehicle finance, MFIs, and housing finance,” read a report from Motilal Oswal Financial Services. confident that loan growth of 25% will be achieved in FY2023. The bank reported healthy loan growth across its business verticals in Q3FY23, resulting in overall credit (loan) growth of 27% YoY, compared to 13% YoY growth last year.,
Analysts anticipate that Equitas SFB’s client base will continue to drive credit growth. Credit expansion is anticipated to be fueled by two key non-micro finance segments: vehicle finance and small business loans. Given the under-entrance in both these portions, examiners at Motilal Oswal gauge advances to develop at 26% CAGR over FY2023-25.
Equitas SFB is in a good position thanks to its favorable current account to savings account ratio (CASA), which comes at a time when the majority of large banks are having difficulty raising deposits to meet credit demand. According to Gyanada Vaidya, a research analyst at Axis Securities, Equitas SFB has the strongest CASA of the listed small finance banks. The bank may not raise interest rates on savings accounts in accordance with rate scenario management, but it will compete with fixed deposit rates.
In the March quarter, the bank’s net interest margin will remain at the current level of 9% due to steady growth in deposits and healthy loan growth. However, there might be a future decrease in it. Vaidya stated, “We see some stress on margins, around 60-70 basis point contraction by FY15” as the bank’s focus shifts more toward a safer portfolio. He went on to say that lowering credit costs and improving the operating ratio would both contribute to the reduction in NIM.
