CAPITAL SMALL FINANCE BANK LTD. 2022-23 Annual Report Analysis

Tue, 20 Feb

CAPITAL SMALL FINANCE BANK LTD. has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the bank during the year 2022-23.

CAPITAL SMALL FINANCE BANK LTD. Income Statement Analysis

• Interest income during the year rose 16.9% on a year-on-year (YoY) basis.
• Interest expenses were up by 9.6% YoY during the same period.
• Operating expenses increased by 13.5% YoY during the year.
• The bank's net interest income (NII) increased by 26.1% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 4.7% in FY23 as against 4.3% in FY22.
• Other income declined by 8.7% YoY during the year.
• Net profit for the year increased by 49.6% YoY.
• Net profit margins during the year increased to 13.8% in FY23 from 10.8% in FY22.

CAPITAL SMALL FINANCE BANK LTD. Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	5,782	6,760	16.9%
Other Income	Rs m	542	495	-8.7%
Interest Expense	Rs m	3,229	3,540	9.6%
Net Interest Income	Rs m	2,553	3,220	26.1%
Operating Expense	Rs m	1,963	2,228	13.5%
Pre-provision Operating Profit	Rs m	1,132	1,487	31.3%
Provisions & Contingencies	Rs m	506	551	8.8%
Profit before tax	Rs m	845	1,242	46.9%
Tax	Rs m	219	306	39.4%
Profit after tax	Rs m	626	936	49.6%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	4.3	4.7
Net profit margin	%	10.8	13.8

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CAPITAL SMALL FINANCE BANK LTD. Balance Sheet Analysis

• The bank's deposits during FY23 stood at Rs 65.6 bn as compared to Rs 60.5 bn in FY22, thereby witnessing an increase of 8.5%.
• Advances for the year stood at Rs 54.3 bn as compared to Rs 46.3 bn during FY22, a rise of 17.1%.
• Cost of deposits for CAPITAL SMALL FINANCE BANK LTD. rose 0.6% and stood at 4.7%, while yield on advances rose to 9.8%.
• The lender's investments rose to Rs 14.9 bn during the year from Rs 13.6 bn in FY22.
• Borrowing stood at Rs 7.2 bn, a growth of 44.7% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 79.9 bn as against Rs 71.5 bn during FY22, thereby witnessing a rise of 11.7%.

CAPITAL SMALL FINANCE BANK LTD. Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	5,158	6,106	18.4%
Advances	Rs m	46,348	54,287	17.1%
Deposits	Rs m	60,464	65,606	8.5%
Yield on advances	%	9.4	9.8
Cost of Deposits	%	4.7	4.7
Investments	Rs m	13,571	14,886	9.7%
Borrowings	Rs m	4,984	7,214	44.7%
Total Assets	Rs m	71,539	79,908	11.7%

Current Valuations for CAPITAL SMALL FINANCE BANK LTD.

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 27.3, an improvement from the EPS of Rs 18.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs {{shareprice}}, stands at 0.0 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 0.0 times, while the price to income ratio stands at 0.0 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	169.9	197.4
Earnings per share (Unadj.)	Rs	18.4	27.3
Diluted earnings per share	Rs	13.9	20.8
Avg P/E ratio	Rs	0.0	0.0
Avg P/ABV ratio	Rs	0.0	0.0
Avg Market Cap	Rs	0	0
Dividends per share (Unadj.)	Rs	1.00	1.20

Ratio Analysis for CAPITAL SMALL FINANCE BANK LTD.

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 82.7x during FY23, from 76.7x during FY22. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio decreased and stood at 11.93x during FY23, from 12.69x during FY22. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): CAPITAL SMALL FINANCE BANK LTD.'s capital adequacy ratio (CAR) was at 18.9% as on 31 March 2023 as compared to 18.6% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank improved and stood at 15.3% during FY23, from 12.1% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank improved and stood at 1.17% during FY23, from 0.87% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank improved and stood at 14.21% during FY23, from 11.72% during FY22. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. CAPITAL SMALL FINANCE BANK LTD.'s gross NPA ratio stood at 2.8% as of 31 March 2023 compared to 2.5% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of CAPITAL SMALL FINANCE BANK LTD. was 1.4% in financial year 2023. This compared with 1.4% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	76.7	82.7
Debt to Equity Ratio	x	12.7	11.9
Loans / Deposits	x	0.1	0.1
Capital Adequacy Ratio	%	18.6	18.9
Return on Equity	%	12.1	15.3
Return on Assets	%	0.9	1.2
Return on Capital Employed	%	11.7	14.2
% of Gross NPAs	%	2.5	2.8
% of Net NPAs	%	1.4	1.4
Yield on Advances	x	9.4	9.8
Yield on Investments	x	6.6	6.6

To see how CAPITAL SMALL FINANCE BANK LTD. has performed over the last 5 years, please visit here.

CAPITAL SMALL FINANCE BANK LTD. Share Price Performance

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Overall, the S&P BSE SENSEX is {{bsesensexupdown}} {{bsesensexchgpercabs}} over the year.

(To know more, you can check out historical annual results for CAPITAL SMALL FINANCE BANK LTD. here and quarterly results for CAPITAL SMALL FINANCE BANK LTD. here)