Key Points of ESAF Bank Growth Target in FY24:
- ESAF Small Finance Bank aims to achieve a growth of 25-30% in FY24, fueled by a rebound in overall business and strong momentum in assets and liability.
- The bank’s growth is attributed to the rise in assets, revenue growth in micro-enterprises, and the addition of 125 new branches, bringing the total number to 700.
- The bank is currently focusing on loan segments, including gold, MSMEs, affordable housing, agriculture, mobility, and traditional microloans.
- The bank is supporting small-scale businesses in various tourist destinations and promoting responsible tourism by offering small loans for homestays to energize the local MSME ecosystem.
- Bank linked NPA rise to COVID-19 and lockdowns but helped customers via moratoriums and restructuring, and sold NPAs worth ₹1,075 crores to an asset reconstruction firm.
- Around 45% of the bank’s overall advances originate from Kerala due to the state government’s focus on micro, small, and medium enterprises.
- ESAF Small Finance Bank is committed to sustainable banking, plans to proceed with the IPO, and aims to be the best social bank. It has opened three outlets in Attapadi and will conduct a financial literacy program in association with NABARD to educate the tribal population on banking basics.
Details of ESAF Bank Growth Target in FY24:
ESAF Small Finance Bank aims to achieve a growth of 25-30% in FY24, fueled by a rebound in overall business and strong momentum in assets and liability. The bank’s total business stood at ₹30,996 crores in FY23, with a deposit component of ₹14,665 crore and advances, including under collection arrangement, of ₹16,330 crore, representing a growth of 23%.
The bank’s growth is attributed to the rise in assets, revenue growth in micro-enterprises, and the addition of 125 new branches, bringing the total number to 700.
According to Paul Thomas, the Managing Director, the bank is currently focusing on loan segments, including gold, MSMEs, affordable housing, agriculture, mobility, and traditional microloans. Additionally, the bank is supporting small-scale businesses in various tourist destinations and promoting responsible tourism by offering small loans for homestays to energize the local MSME ecosystem.
While microloans initially constituted nearly 100% of the bank’s assets, they now account for around 70% due to significant growth in other asset segments.
NPA Position and Impact on Business
The Managing Director of ESAF Small Finance Bank attributed the rise in Non-Performing Assets (NPAs) to the Covid-19 pandemic and repeated lockdowns. However, the bank supported its customers through moratoriums and loan restructuring, among other measures.
It also sold NPAs worth ₹1,075 crores to an asset reconstruction company. The bank’s loan utilization reflects the Kerala Government’s focus on micro, small, and medium enterprises, with around 45% of the bank’s overall advances originating from Kerala.
ESAF Bank’s Sustainable Banking and IPO Plans
ESAF Small Finance Bank is committed to pursuing sustainable banking practices from the beginning, which have gained significance due to climate change. The bank aims to be the best social bank and has opened three outlets in Attapadi, the biggest tribal taluk in Kerala, which currently lacks a branch of any other new-gen private bank.
The bank is planning a financial literacy program in association with NABARD to educate the tribal population on the basics of banking. The bank plans to go ahead with the IPO and is preparing to re-file the DHRP soon. Despite its work in sustainable banking, the bank’s business and profit momentum has remained strong, as demonstrated by its best-in-class rating for ESG practices from CareEdge Ratings.
About Dhruv:
ESAF Bank is a provider of banking services and small loans to the underbanked in India. It originated as an NGO called Evangelical Social Action Forum in 1992 and became a small finance bank in March 2017.
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