💰 Financial Performance

Revenue Growth by Segment

Interest earned grew by 23.0% YoY to INR 1,953.7 Cr in FY25 from INR 1,588.7 Cr in FY24. The growth was driven by a 23.5% increase in net advances to INR 9,974.3 Cr. The microfinance segment's share of the portfolio decreased to 53% as of December 2024 from 59% in March 2024, while non-microfinance segments like commercial vehicles and MSME loans are scaling up to diversify revenue streams.

Geographic Revenue Split

The bank operates across 16 states and Union Territories as of September 2024. While specific revenue percentages per state are not disclosed, the bank caters to 36 lakh unique customers through 712 branches, focusing on urban and semi-urban areas for its micro-loan and retail deposit operations.

Profitability Margins

Profitability faced significant pressure with Profit After Tax (PAT) declining 46.8% YoY to INR 115.0 Cr in FY25. Yield on advances decreased to 18.8% in FY25 from 20.2% in FY24. Return on Average Total Assets (ROA) declined to 1.5% in 9M FY25 from 1.9% in FY24 due to higher slippages and increased operating expenses.

EBITDA Margin

Operating Profit after CGFMU expenses stood at INR 389.2 Cr in FY25, a decline of 14.3% YoY from INR 453.9 Cr. This was impacted by a 27.6% increase in operating expenses to INR 861.6 Cr, primarily driven by a 23.1% rise in employee expenses and a 38.0% increase in CGFMU guarantee premiums.

Capital Expenditure

The bank maintained a strong capitalization profile with a Capital Adequacy Ratio (CAR) of 24.95% as of September 2024 and 26.9% as of December 2024, well above the 15% regulatory requirement. Net worth stood at INR 1,925 Cr as of September 2024, supported by the last major equity raise of approximately INR 522 Cr in FY21.

Credit Rating & Borrowing

ICRA reaffirmed the rating for the INR 100 Cr Subordinated debt programme at [ICRA]A (Stable) and the INR 130 Cr Certificate of Deposit programme at [ICRA]A1+. Borrowing costs are approximately 8%, with total borrowings standing at INR 2,710 Cr, forming 17% of total liabilities as of March 2025.

⚙️ Operational Drivers

Raw Materials

As a financial institution, the primary 'raw material' is the Cost of Funds, which is approximately 8%. Interest expensed rose 35.3% YoY to INR 847.6 Cr in FY25 as the bank scaled its deposit base.

Import Sources

Not applicable for banking operations; funding is sourced domestically through retail deposits and institutional borrowings within India.

Key Suppliers

Not applicable; however, the bank utilizes systemic liquidity facilities from the Reserve Bank of India (RBI) and funding lines from other Financial Institutions (FIs).

Capacity Expansion

Current infrastructure includes 712 branches as of September 2024. The bank is expanding its secured loan portfolio, targeting an asset base of INR 5,000 Cr each for mortgages and commercial vehicles to achieve better economies of scale.

Raw Material Costs

Interest expenses represent 43.4% of total interest earned. The bank is focusing on increasing its CASA ratio, which stood at 17.9% to 19.5% in FY25, to lower the overall cost of deposits and improve margins.

Manufacturing Efficiency

Operational efficiency is measured by the cost-to-income ratio; operating expenses grew faster (27.6%) than net total income (12.0%) in FY25, indicating a temporary decline in efficiency due to expansion and credit guarantee costs.

Logistics & Distribution

Distribution is handled through its 712 branches; the bank is focusing on digital analytics and a strengthened collections team to improve the efficiency of loan disbursements and recoveries.

📈 Strategic Growth

Expected Growth Rate

15-20%

Growth Strategy

The bank aims to achieve this growth by diversifying its portfolio toward a 50-50 mix between microfinance and secured retail assets (Commercial Vehicles, MSME, and Housing loans). It plans to leverage its 'scheduled' bank status to garner more retail deposits and utilize CGFMU cover to protect the micro-banking segment while scaling long-tenor annuity products.

Products & Services

Micro banking (JLG) loans, Commercial Vehicle loans, MSME loans, Affordable Housing loans, Financial Intermediary Group loans, Savings Accounts, and Fixed Deposits.

Brand Portfolio

Suryoday Small Finance Bank.

New Products/Services

Scaling of relatively newer products such as Commercial Vehicles, MSME loans, and Housing loans is expected to eventually contribute to 50% of the total AUM, providing more stable, secured revenue streams.

Market Expansion

The bank is deepening its presence in its existing 16 states/UTs, focusing on transitioning from a micro-lender to a diversified retail bank.

Market Share & Ranking

Not specifically ranked, but it is a prominent Small Finance Bank that transitioned from a microfinance institution in 2017.

Strategic Alliances

The bank received RBI approval for 1729 Capital and its associates to hold a 7.14% aggregate stake, indicating institutional investor support.

🌍 External Factors

Industry Trends

The Small Finance Bank industry is shifting toward 'secured' lending to mitigate the volatility of unsecured microfinance. Suryoday is following this trend by reducing its microfinance concentration from 67% in FY22 to 53% in FY25.

Competitive Landscape

Competes with other SFBs, NBFC-MFIs, and private sector banks in the micro-banking and MSME lending space.

Competitive Moat

The bank's moat is built on its 'scheduled commercial bank' status, which provides access to low-cost systemic liquidity, and a strong retail deposit franchise where 80% of deposits are from retail sources.

Macro Economic Sensitivity

Highly sensitive to rural economic health and inflation, as these directly impact the repayment capacity of microfinance borrowers. Adverse climate events also disrupt the cash flows of the JLG customer base.

Consumer Behavior

Increasing credit awareness and demand for formal credit in semi-urban areas are driving the growth of the bank's MSME and housing loan segments.

Geopolitical Risks

Minimal direct impact; however, global inflationary pressures can influence domestic interest rates and the bank's cost of funds.

⚖️ Regulatory & Governance

Industry Regulations

Subject to RBI's Master Directions on Acquisition and Holding of Shares (Jan 2023) and maintaining a minimum CAR of 15%. It must also comply with the Banking Regulation Act, 1949.

Environmental Compliance

The bank encounters indirect environmental risks through its asset portfolio; it contributes to financial inclusion for marginalized sections as part of its social governance.

Taxation Policy Impact

Effective tax expense was INR 28.9 Cr in FY25, down 59.7% YoY following the decline in Profit Before Tax.

Legal Contingencies

The bank manages various operational and compliance-related legalities; specific pending court case values were not disclosed in the provided documents.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the stabilization of asset quality in the microfinance segment, where GNPAs increased to 5.5% in December 2024. Sustained pressure here could keep credit costs high and ROA below the 1% threshold.

Geographic Concentration Risk

Operations are spread across 16 states, but the bank remains exposed to regional socio-political or climatic disruptions affecting microfinance clusters.

Third Party Dependencies

Dependency on the CGFMU guarantee scheme is high, as it covers 95% of the microfinance portfolio, providing a critical safety net for credit risk.

Technology Obsolescence Risk

The bank is investing in business analytics to modernize its individual assessment and collection processes to remain competitive against digital-first lenders.

Credit & Counterparty Risk

Credit risk is concentrated in the micro-banking segment (JLG model); however, the shift toward secured assets like housing and commercial vehicles (now 47% of AUM) is improving the overall counterparty risk profile.