Guiding us with a Vision
The Bank's current and future initiatives resonate with Equitas1 mission to create 'the
most valuable bank for all stakeholders through happy employees' while seamlessly blending
continuity and evolution.
Dear Esteemed Stakeholders,
As we navigate 2023-24, I am honoured to begin my first year with Equitas and embark on
this exciting journey with you.
It is my pleasure to present the Equitas Small Finance Bank's annual report, which
chronicles our journey through challenges, reflecting our commitment to inclusive growth
and sustainable development.
Overview of the Global Economy
The global economic landscape has been characterised by significant volatility and
uncertainties, posing challenges that have tested the resilience of nations and
businesses. The United States and several large emerging markets and middle- income
economies displayed notable performance, driven by stronger-than-expected private
consumption amid still-tight- though-easing labour markets. In the USA, aggregate demand
was supported by private consumption, with fiscal forecasts for CY 2025 estimated at 1.9%
of GDP.
The Euro Area had the smallest upside growth surprise due to weak consumer sentiment
and lingering high energy prices, with fiscal forecasts for CY 2025 at 1.5%of GDP. In
China, the fiscal stance was mildly tighter than expected by
4.1 % of GDP, and inflation fell unexpectedly, driven by sharply lower domestic food
prices and their pass-through effects on underlying core inflation. However, the road to
sustained global economic recovery remains arduous, requiring concerted efforts from
policymakers, businesses, and stakeholders to navigate the complexities and mitigate risks
effectively.
India's Positioning in the Global Context
Amid this challenging global environment, India has emerged as a shining beacon of hope
and economic prowess. The Reserve Bank of India (RBI) gave a 8.2% real GDP growth for
2023-24, marking the third consecutive year of growth exceeding 7%. This strong
performance has attracted significant foreign investment, with FIIs and FPIs increasing
their investment bucket into the Indian market, further fuelling economic growth. The
influx of foreign capital contributed to an improved balance of payments position, with
the current account swinging to a surplus in January-March 2024 for the first time in
eleven quarters. This positive trend in the balance of payments has been accompanied by a
rise in foreign exchange reserves, which have hit a lifetime high of
US$ 645.58 Billion as of April 2024, providing a strong buffer against potential
economic shocks and enhancing India's financial stability.
The strengthening of forex reserves aligns with the RBI's focus on building a
substantial buffer to weather future economic challenges. Meanwhile, the banking sector is
also showing positive signs, with credit growth expected to be in the range of 14-14.5%
for 2024-25 driven by broader growth across segments and increased capital expenditure.
This credit growth is likely to further stimulate economic activities and investments.
Despite potential challenges, banks are anticipated to maintain robust deposit growth of
12-13% year- on-year for 2024-25, indicating continued confidence in the banking sector,
while providing a sufficient and stable funding base for future lending activities.
Performance Highlights
The financial year 2023-24 was a good one for the Bank. We navigated the rising
interest rate cycle effectively, maintaining margins, yields, and profitability. On a full
year basis, the Bank registered a balance sheet growth of 30%. Achieved a net profit after
tax of Rs. 799 Crores in 2023-24, marking a 39% increase from 2022-23. Our asset quality
improved, with Gross Non-Performing Assets (GNPA) at 2.52% compared to 2.6% in 2022-23,
and Net Non-Performing Assets (NNPA) at 1.12%, down from 1.14% in 2022-23. Despite rising
costs of funds, we sustained a Net Interest Margin (NIM) of 8.36% for 2023-24. This year's
performance has laid a solid foundation for continued growth and success. The Bank remains
well-capitalised, with a Capital to Risk-weighted Assets Ratio (CRAR) of 21.70%, exceeding
the 15% regulatory requirement. We have been trying to build consistency and registered a
ROA of 2% and ROE of 14.43% for 2023-24.
During the year, investments for the future were made mainly in new product segments
like credit cards, personal loans and various remittance products under the AD1 license.
Additionally, the Bank continues to invest in technology to create platforms that are
scalable and be able to quickly adopt emerging trends. A robust single loan origination
and Super App are the two platforms we are most excited about.
Vision for the future
The Bank's current and future initiatives resonate with Equitas' mission to create
"the most valuable bank for all stakeholders through happy employees" while
seamlessly blending continuity and evolution, which is exemplified through our 'Now &
Next' approach.
While the term 'Now' represents our long-standing commitment to financial empowerment,
transparency, and tailored value propositions for underserved segments, 'Next' signifies
our forward-thinking approach. This transition aims to position the Bank as mass retail
consumer focussed and technology driven.
Social Impact
Since inception, your Bank has dedicatedly invested 5% of its net profit towards CSR
initiatives while also being involved in the entire process that impacts lives. Through
the Equitas Development Initiatives Trust (EDIT) and the Equitas Healthcare
Foundation (EHF), we focus on health, education, upskilling, employment, and
rehabilitation, thereby empowering individuals in our communities. Our Equitas Gurukul
Schools aim to nurture and empower children by providing not only education but
transforming them into responsible individuals.
During the year, we achieved an important milestone of inaugurating the Sringeri
Sharada Equitas Hospital (SSEH) a joint venture with Sringeri Sharada Mutt. The Mutt
generously provided land in Chennai for a hospital dedicated to cancer care. The hospital,
managed by the Equitas Healthcare Foundation, aims to provide high-quality cancer care at
affordable rates. Through their support, we have successfully developed a pricing model
that significantly reduces health care costs for economically weaker sections and
lower-income households.
Expression of Gratitude
I would like to take a moment to express my sincere gratitude to our outgoing Chairman,
Mr. Arun Ramanathan, for his outstanding leadership at Equitas Small Finance Bank. His
strategic guidance has been pivotal in navigating challenges and reinforcing our
commitment to becoming a mass retail Bank, empowering unbanked and underserved
communities, and making a positive impact on countless lives. We are grateful for his
efforts in promoting integrity, excellence, and compassion within our culture. On behalf
of the entire ESFB team, we wish him luck as he pursues new endeavours, confident that his
principles and visionary approach will continue to benefit organisations and drive
positive transformations.
Our success is a collective effort, and we extend our heartfelt gratitude to our valued
stakeholders - our customers, employees, partners, and shareholders - whose trust and
support have been the driving force behind our achievements. Your belief in our vision and
your commitment to our shared goals have been instrumental in propelling us forward.
The success of the Bank evidences the collective faith placed in our vision. We are
committed to carrying this legacy forward, continuously empowering our customers to
achieve their aspirations.
Warm regards,
Anil Kumar Sharma
Part-Time Chairman and
Non-Executive Independent Director