Smaller Financial Banks’ Capital Raising Accelerates in Q2 FY23: CareEdge Analysis

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Although small financial banks still represent only a small part of the banking sector with a market share of 1.14% in advances and 0.71% in deposits as of March 31, 2022, their good mobilization of deposits and their outreach to the underbanked helped them gain more market share. .

With a strong focus on liability deductibles, SFBs significantly improved their loan deposit ratio and achieved significant loan portfolio diversification as well as strong growth in advances.

Going forward, the share of non-microfinance portfolio is expected to increase significantly in the medium to long term.

The advances portfolio grew at a four-year compound annual growth rate of approximately 40% relative to private sector banks, which grew at a CAGR of 18% over the past four years ending March 31 2022.

Total advances increased 24% (YoY) while deposits increased 32% (YoY) in FY22.

We expect the industry to maintain a 24% advance growth rate in FY23 as some SFBs face capital constraints.

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