Key Financial Performance Highlights (Q1 FY27 vs Q1 FY26)

Business Growth:

  • Total business reached INR 50,140 crores, registering 23% YoY growth (from INR 40,923 crores)
  • Including IBPC transaction: INR 51,140 crores total business
  • Gross advances: INR 23,216 crores, up 27% YoY (from INR 18,224 crores)
  • Total deposits: INR 26,924 crores, up 19% YoY (from INR 22,698 crores)
  • Credit-Deposit Ratio: 82.3%

Profitability Metrics:

  • Net Interest Income: INR 584 crores (from INR 378 crores YoY)
  • Net Interest Margin: 7.9% (expected to moderate but remain above 7.5%)
  • Pre-provisioning Operating Profit: INR 349 crores, up 179% YoY
  • Profit After Tax: INR 80 crores (significant improvement from INR 24 crores in Q4 FY26)
  • Return on Assets: 1% (annualized)
  • Return on Equity: 17.5% (annualized)

Asset Quality Indicators:

  • Gross NPA: 5.4% (improved from 7.5% in Q1 FY26)
  • Net NPA: 0.8% (improved from 3.8% in Q1 FY26)
  • Slippages: INR 75 crores (reduced sharply from INR 468 crores YoY)
  • Provision Coverage Ratio: 86% (81% without additional provisions)
  • Additional provision set aside: INR 65 crores over RBI norms
  • Credit Cost: 4.4% (annualized), expected to reduce to ~2% by FY27 end
  • Gross Slippage Ratio: 1.4% (annualized)

Portfolio Composition and Strategy

Secured vs Unsecured Mix:

  • Secured loan book: INR 14,465 crores (35% YoY growth), representing 62% of total gross advances
  • Unsecured loan book: INR 8,751 crores (16% YoY growth)

MARG Portfolio Performance:

  • MARG portfolio: INR 12,909 crores (42% YoY growth)
  • Represents 56% of total portfolio
  • Includes strong growth in agriculture, gold, vehicle, and mortgage segments

Emerging Household (EH) Segment:

  • EH loans grew 185% YoY and 14% QoQ
  • Contributes 32% of total gross advances
  • Targets customers with annual income INR 3-15 lakhs, ticket size < INR 10 lakhs
  • Includes individual loans (unsecured), SHG, enterprises, and FIG (secured)

Microfinance Portfolio:

  • Traditional group lending portfolio has degrown as part of strategic transition
  • Focus on migrating eligible borrowers to individual and secured lending under EH framework

Liability Franchise and Funding

Deposit Composition:

  • Retail deposits: INR 24,487 crores (13% YoY growth), representing 91% of total deposits
  • CASA deposits: INR 6,297 crores (12% YoY growth)
  • CASA ratio: 23.4%
  • Non-resident deposits showing steady sequential growth for four quarters

Liquidity Position:

  • Liquidity Coverage Ratio: 133.31% as of June 30, 2026

Distribution Network and Customer Base

Physical Presence:

  • Total banking outlets: 821 (added 17 new outlets in Q1)
  • ATMs: 721
  • Customer service centres: 1,064
  • Institutional business correspondents: 31
  • Geographic coverage: 24 states and 2 union territories

Customer Metrics:

  • Total customers: 1.04 crore (added 1.86 lakh new customers in Q1)

Technology Transformation - ESAF 2.0 StratoNeXt

Implementation Status:

  • Key strategic digital and IT transformation program
  • Progressing well on training and adoption
  • Expected full implementation by end of calendar year 2026

Expected Benefits:

  • Improved agility in core business processes
  • Faster adaptation to market needs
  • Improved turnaround times
  • Enhanced customer experience and service
  • Better scalability, automation, and operational efficiency
  • Faster product launches and improved straight-through processing
  • Stronger risk control

Management Appointments

Recent Leadership Additions:

  • Mr. Venkateswarlu Mallineni appointed as National Head, Branch Banking
  • Mr. Narasimha Murthy appointed as Chief Risk Officer

Capital and Growth Outlook

Capital Adequacy:

  • CRAR: ~24% (comfortable position)
  • Need to reduce promoter holding to 26% by 2032
  • Exploring Tier 1 capital raise when market conditions improve, possibly by end of CY2026

Growth Guidance:

  • Minimum 25% growth expected
  • ROA target: 2% by FY27 end, potentially exceeding 2% in FY28
  • Steady-state ROA expectation: 2-2.5%

Branch Expansion Plan:

  • FY27 plan: 50 new branches
  • Q1 progress: 17 branches already opened and operationalized
  • Focus locations: Rural and semi-urban areas (regulatory requirement: 25% branches in unbanked rural locations)

Other Income Details

PSLC Income:

  • Q1 FY27: INR 69 crores from Priority Sector Lending Certificate income
  • Expected to continue but at lower rates in coming quarters
  • Full-year expectation: INR 20-25 crores per quarter

Tax Rate Guidance

Effective Tax Rate:

  • Expected around 25.5%
  • DTA (Deferred Tax Asset) available to offset cash outflow

Regional Concentration

Deposit Geography:

  • 71% of total deposits from Kerala
  • Diversification strategy: Leveraging branch network across 26 states built over last 2 years

Gold Loan Portfolio

Current Status:

  • Represents 42% of total loan portfolio
  • Disbursement lower QoQ due to gold price correction affecting repledging intensity
  • Book growth guidance maintained at 22-25% for assets

Credit Guarantee Scheme

CGFMU Coverage:

  • Micro banking portfolio not covered under Credit Guarantee Fund for Micro Units (CGFMU)
  • Conscious decision due to traditionally low delinquencies
  • Future coverage decision pending

Macro Environment Commentary

Economic Context:

  • Indian economy and banking sector showing resilience despite West Asia crisis
  • Healthy credit growth across segments
  • Steady deposit mobilization
  • No material impact on business or operating performance
  • Management remains cautious and watchful for future developments