Jana Small Finance Bank reported a profit of ₹170 crore for the quarter ended September 30, compared to ₹75 crore in the same period last year. The bank is aggressively shifting its focus from unsecured to secured lending to reduce risk. Investors may track the bank's ability to balance this growth with its cost of deposits, as the CASA ratio saw a slight decline.
Jana Small Finance Bank posted a strong financial performance for the second quarter ended September 30, with its profit reaching ₹170 crore. This is a sharp increase from the ₹75 crore reported in the same quarter last year, reflecting improved operational efficiency. The bank's core revenue, or net interest income, grew by 35% to ₹819 crore, signaling solid operational momentum. Following these results, the bank has updated its profit growth guidance for the current financial year to 100% year-on-year.
The lender is currently executing a strategic shift to reduce risk by moving away from unsecured loans and increasing its focus on secured lending, which is backed by assets like property or vehicles. The total loan portfolio grew by 22% to ₹38,752 crore. Secured loans now account for 73.7% of the total loan book, and the bank aims to push this figure to 80% in the future. While growth in unsecured lending slowed, the 24% growth in secured assets demonstrates that the company is successfully changing its credit mix.
Operational margins also showed improvement. Net interest margins, which measure the difference between the interest a bank earns on loans and the interest it pays on deposits, rose to 7.5% from 6.5% a year ago. Asset quality metrics also improved, with the gross non-performing assets ratio dropping to 2.17% from 2.8% in the previous year. This suggests that the bank is managing its loan book more effectively.
However, there are areas for investors to monitor closely. The CASA ratio, which tracks the percentage of money held in low-cost savings and current accounts, dipped to 17.6% from 18.3% a year earlier. This indicates that the bank is relying more on term deposits to fund its operations, which are typically more expensive for the bank to maintain. Additionally, the bank’s goal to reduce net non-performing assets to below 1% in the December quarter depends on receiving ₹68 crore in anticipated credit guarantee claims. Shareholders will likely watch to see if these claims are processed as planned in the coming months.