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Suryoday Small Finance Bank Ltd

| Quarterly Financial Results Q3 FY 2025-26

NEUTRAL SENTIMENT

Report Source

⬤22nd Jan 26

Summary : Suryoday Small Finance Bank reported mixed Q3/9M results with strong asset growth but declining profitability and rising NPAs, while planning a significant capital raise.

Quarterly Report Analysis & Insights

Financial Disclosures

  1. Total Expenditure (excluding Provisions and Contingencies): ₹1,55,099 Lakhs (9M ended Dec 31, 2025).
  2. Interest Expended: ₹77,654 Lakhs (9M ended Dec 31, 2025).
  3. Operating Expenses: ₹77,445 Lakhs (9M ended Dec 31, 2025), including Employees cost (₹36,967 Lakhs) and Other operating expenses (₹40,478 Lakhs).
  4. Provisions (other than tax) and Contingencies: ₹14,316 Lakhs (9M ended Dec 31, 2025).
  5. Details on transferred loans: Aggregate Principal outstanding ₹13,661.84 Lakhs, consideration received ₹12,978.75 Lakhs.
  6. Transferred stressed loans: 1 account to ARCS with principal outstanding ₹1,166 Lakhs.
  7. Total Income: ₹1,82,807 Lakhs (9M ended Dec 31, 2025).
  8. Interest Earned: ₹1,55,870 Lakhs (9M ended Dec 31, 2025).
  9. Other Income: ₹26,937 Lakhs (9M ended Dec 31, 2025).
  10. Segment Revenue (9M ended Dec 31, 2025): Retail Banking (₹1,69,584 Lakhs), Treasury (₹22,310 Lakhs), Corporate (₹11,702 Lakhs).
  11. Floating provision of ₹5,049 Lakhs as on December 31, 2025, used for net NPA and provision coverage ratio.
  12. Total Assets: ₹17,03,920 Lakhs (as of Dec 31, 2025).
  13. Total Liabilities: ₹17,03,920 Lakhs (as of Dec 31, 2025).
  14. Deposits: ₹12,86,485 Lakhs (as of Dec 31, 2025), up from ₹9,70,756 Lakhs (Dec 31, 2024).
  15. Advances: ₹11,52,076 Lakhs (as of Dec 31, 2025), up from ₹9,32,660 Lakhs (Dec 31, 2024).
  16. Net Worth: ₹1,98,074 Lakhs (as of Dec 31, 2025), up from ₹1,90,872 Lakhs (Dec 31, 2024).
  17. Not Applicable, as per disclosure on Page 9.
  18. Standalone financial statements, as the Bank has no subsidiaries/associates/joint ventures.

Corporate Overview

  1. Primarily India, with registered and corporate offices in Navi Mumbai.
  2. Estimated incremental impact of ₹18.13 lakhs on 'Employees cost' due to the implementation of new Labour Codes.
  3. Increase in Gross and Net Non-Performing Assets (NPAs).
  4. Decrease in profitability metrics (Operating Profit, PBT, PAT, Return on Assets).
  5. Approximately 95% of the Bank's unsecured portfolio is covered under the Credit Guarantee Fund for Micro Units Scheme (CGFMU).
  6. Suryoday Small Finance Bank Limited operates as a small finance bank.
  7. Factual and compliant, reporting on regulatory approvals and financial performance without explicit forward-looking statements or sentiment.
  8. Focus on micro-units, with a significant portion of unsecured loans covered by the Credit Guarantee Fund for Micro Units Scheme (CGFMU).
  9. Retail Banking (highest revenue segment)
  10. Treasury operations
  11. Corporate banking
  12. Other Banking Operations
  13. Approval to raise funds up to ₹1,000 Crore through equity shares, equity linked securities, warrants, or other eligible securities via Preferential Allotment, Qualified Institutions Placement (QIP), Private Placement, or Rights Issue.

Risk Factors

  1. Significant increase in Gross and Net NPAs.
  2. Capital Adequacy Ratio has decreased.
  3. Profitability metrics show a notable decline.
  4. New Labour Codes impact employee costs.

Key Drivers

  1. Approved to raise ₹1,000 Crore capital.
  2. Strong growth in deposits and advances.
  3. Improved debt-equity ratio indicates stability.
  4. Unsecured loans highly covered by CGFMU.

Auditor’s Report

  1. Unmodified opinion/conclusion on the unaudited interim financial results.
  2. Not explicitly stated as 'Key Audit Matters' in the limited review report, but the auditors confirmed no material misstatement.

Board Commentary

  1. Re-appointment of Mr. Krishna Prasad Nair as a Non-Executive Independent Director for a further period of 3 years, effective July 22, 2026, subject to shareholder approval.
  2. The report highlights the estimated incremental impact on employee costs due to new Labour Codes.
  3. Implicit risks from increased NPAs and decreased profitability are present in the financial results.
  4. Compliance with SEBI Listing Regulations (Regulations 30, 33, 52, 54) and RBI guidelines.
  5. Monitoring developments related to the implementation of new Labour Codes.
  6. Approval to raise funds up to ₹1,000 Crore through various equity-linked instruments (Preferential Allotment, QIP, Private Placement, Rights Issue) subject to shareholder approval.

Corporate Governance

  1. Re-appointment of a Non-Executive Independent Director (Mr. Krishna Prasad Nair) for a three-year term.
  2. Audit Committee and Nomination and Remuneration Committee are in place.

Management Discussion & Analysis

Future Strategy

  1. Seeking shareholder approval to raise up to ₹1,000 Crore capital to support future growth and capital requirements.

Operational Focus Areas

  1. Ensuring compliance with SEBI Listing Regulations and RBI guidelines.
  2. Monitoring and assessing the financial impact of new Labour Codes.
  3. Implementing RBI circulars on NPA provisioning for CGFMU-covered loans.

Performance Drivers

  1. Significant growth in total income, deposits, and advances.
  2. Increase in net worth.
  3. Improved debt-equity ratio.

Risk Control Measures

  1. Maintaining floating provisions of ₹5,049 lakhs for net NPA and provision coverage ratio.
  2. Leveraging Credit Guarantee Fund for Micro Units Scheme (CGFMU) coverage for ~95% of unsecured portfolio.
  3. Adjusting NPA provisioning methodology as per RBI circular to provision only on the unguaranteed portion of CGFMU-covered loans.

Critical Risks

  1. Increase in Gross NPAs to 6.69% and Net NPAs to 4.35% as of December 31, 2025.
  2. Decline in Capital Adequacy Ratio to 21.94% as of December 31, 2025.
  3. Decreased Net Profit after tax for the nine months ended December 31, 2025.
  4. Potential increase in employee costs due to new Labour Codes.