Capital Small Finance Bank shares rise after strong loan growth in Q2; Asset quality stable

Shares of Capital Small Finance Bank Ltd. gained on Friday, October 3, in response to its September quarter business update, shared to the exchanges earlier in the day.

The lender reported a 19.8% growth in its deposits to ₹9,317 crore at the end of the September quarter, in comparison to the ₹7,780 crore it reported during the same quarter last year. 

In comparison to the June quarter figure of ₹9,110 crore, the deposit growth stood at 2.3% for Capital Small Finance Bank.

Gross advances for the quarter

grew by 17.7% to ₹7,907 crore from ₹6,718 crore in the year-ago period. Disbursements or new lending for the quarter increased to ₹805 crores, marking a 36.2% growth from ₹591 crores disbursed in the same quarter last year.

Asset quality remained stable. Gross NPA stood at 2.7% at the end of the September quarter, which is the same as the 2.7% it reported at the end of the June quarter.

"This reflects the Bank’s consistent emphasis on prudent underwriting, robust recovery mechanism, and a well-secured, diversified & granular loan book that continues to demonstrate strong repayment behavior," the management said in an exchange filing.

CASA ratio for the lender declined to 33.9% from 35.9% at the end of the June quarter, despite the broader industry shift towards term deposits in a low interest rate environment.

"The Bank continue to successfully preserve a robust CASA base, reflecting both the stickiness of its retail depositors and the strength of its franchise-led trust," Capital Small Finance Bank said in its statement.

Capital Small Finance Bank's average credit-deposit ratio stood at 81.5% compared to 80.9% in the previous quarter and 82.4% for the quarter ended September 30, 2024.

Liquidity Coverage Ratio at the end of the quarter stood at 234.9% from 238.1% in the year-ago period.

Shares of Capital Small Finance Bank are trading 1.6% higher at ₹288. The stock still trades 38% below its IPO price of ₹468 but has remained little changed in the last one month.

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