CAPITAL SMALL FINANCE BANK LTD. 2023-24 Annual Report Analysis

Mon, 12 Aug

CAPITAL SMALL FINANCE BANK LTD. has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the bank during the year 2023-24.

CAPITAL SMALL FINANCE BANK LTD. Income Statement Analysis

• Interest income during the year rose 17.5% on a year-on-year (YoY) basis.
• Interest expenses were up by 26.9% YoY during the same period.
• Operating expenses increased by 16.0% YoY during the year.
• The bank's net interest income (NII) increased by 7.2% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 4.4% in FY24 as against 4.7% in FY23.
• Other income increased by 37.6% YoY during the year.
• Net profit for the year increased by 19.2% YoY.
• Net profit margins during the year increased to 14.0% in FY24 from 13.8% in FY23.

CAPITAL SMALL FINANCE BANK LTD. Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	6,760	7,943	17.5%
Other Income	Rs m	495	681	37.6%
Interest Expense	Rs m	3,540	4,492	26.9%
Net Interest Income	Rs m	3,220	3,451	7.2%
Operating Expense	Rs m	2,228	2,583	16.0%
Pre-provision Operating Profit	Rs m	1,487	1,549	4.2%
Provisions & Contingencies	Rs m	551	434	-21.3%
Profit before tax	Rs m	1,242	1,482	19.4%
Tax	Rs m	306	367	20.1%
Profit after tax	Rs m	936	1,115	19.2%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	4.7	4.4
Net profit margin	%	13.8	14.0

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CAPITAL SMALL FINANCE BANK LTD. Balance Sheet Analysis

• The bank's deposits during FY24 stood at Rs 74.8 bn as compared to Rs 65.6 bn in FY23, thereby witnessing an increase of 14.0%.
• Advances for the year stood at Rs 60.7 bn as compared to Rs 54.3 bn during FY23, a rise of 11.9%.
• Cost of deposits for CAPITAL SMALL FINANCE BANK LTD. rose 12.5% and stood at 5.3%, while yield on advances rose to 10.3%.
• The lender's investments rose to Rs 17.1 bn during the year from Rs 14.9 bn in FY23.
• Borrowing stood at Rs 4.7 bn, a fall of 34.5% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 93.0 bn as against Rs 79.9 bn during FY23, thereby witnessing a rise of 16.3%.

CAPITAL SMALL FINANCE BANK LTD. Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	6,106	11,974	96.1%
Advances	Rs m	54,287	60,747	11.9%
Deposits	Rs m	65,606	74,777	14.0%
Yield on advances	%	9.8	10.3
Cost of Deposits	%	4.7	5.3
Investments	Rs m	14,886	17,057	14.6%
Borrowings	Rs m	7,214	4,723	-34.5%
Total Assets	Rs m	79,908	92,953	16.3%

Current Valuations for CAPITAL SMALL FINANCE BANK LTD.

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 24.8, an improvement from the EPS of Rs 27.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 320.1, stands at 15.9 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 1.2 times, while the price to income ratio stands at 2.2 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	197.4	176.4
Earnings per share (Unadj.)	Rs	27.3	24.8
Diluted earnings per share	Rs	20.8	24.8
Avg P/E ratio	Rs	0.0	15.9
Avg P/ABV ratio	Rs	0.0	1.2
Avg Market Cap	Rs	0	17,763
Dividends per share (Unadj.)	Rs	1.20	1.20

Ratio Analysis for CAPITAL SMALL FINANCE BANK LTD.

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio deteriorated and stood at 81.2x during FY24, from 82.7x during FY23. 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 6.64x during FY24, from 11.93x during FY23. 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 27.4% as on 31 March 2024 as compared to 18.9% 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 deteriorated and stood at 9.3% during FY24, from 15.3% during FY23. 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 1.20% during FY24, from 1.17% during FY23. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank deteriorated and stood at 13.19% during FY24, from 14.21% during FY23. 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 2024 compared to 2.8% 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 2024. This compared with 1.4% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	82.7	81.2
Debt to Equity Ratio	x	11.9	6.6
Loans / Deposits	x	0.1	0.1
Capital Adequacy Ratio	%	18.9	27.4
Return on Equity	%	15.3	9.3
Return on Assets	%	1.2	1.2
Return on Capital Employed	%	14.2	13.2
% of Gross NPAs	%	2.8	2.8
% of Net NPAs	%	1.4	1.4
Yield on Advances	x	9.8	10.3
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

Over the last one year, CAPITAL SMALL FINANCE BANK LTD. share price has moved up from Rs 0.0 to Rs 320.1, registering a gain of Rs 320.1 or around 0.0%.

Meanwhile, the S&P BSE BANKEX is trading at 57,247.2 (down 0.4%). Over the last one year it has moved up from 49,608.2 to 57,247.2, registering a gain of 7,639.0 points (up 15.4%).

Overall, the S&P BSE SENSEX is up 20.6% 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)