Jana Small Finance Bank has revised its Profit After Tax (PAT) growth guidance upwards from 80% to 100% for the financial year. This upward revision comes after the bank reported its highest ever Profit Before Tax (PBT) in Q2 and achieved half-year profits equivalent to last year’s full-year performance. The bank highlighted improved net interest margins, controlled costs, and robust secured asset growth as key drivers for this optimistic outlook.
Jana Small Finance Bank Elevates Profit Guidance
Jana Small Finance Bank has announced a significant upward revision of its Profit After Tax (PAT) growth guidance for the fiscal year, now targeting 100% growth, an increase from the previously projected 80%. This optimistic outlook stems from a strong performance in the second quarter (Q2) and the first half (H1) of the financial year. The bank reported its highest ever Profit Before Tax (PBT) for Q2, with H1 profits already matching the entirety of the previous year’s full-year profit of INR326 crores.
Key Performance Drivers
The upward revision is supported by several key operational and financial improvements. The bank reported a substantial increase in its Net Interest Margins (NIMs), reaching 7.54% in Q2, up from 6.5% in the same quarter last year. This improvement was attributed to a better asset mix, including positive growth in the Microfinance Institutions (MFI) segment and a reduction in the cost of funds from 7.9% to 7.4%.
Furthermore, the bank highlighted a strong growth in secured assets, which now constitute 73.7% of its portfolio, moving towards its target of 80%. Despite a 15% year-on-year increase in operating costs, the bank achieved a positive ‘jaws’ effect, with net interest income rising by 35% against a 15% cost increase. This indicates improved operating leverage and efficiency.
Asset Quality and Credit Cost
Asset quality remains a focus, with Gross NPA decreasing to 2.17%. The bank anticipates its net NPA will fall below 1% once claims for the guarantee program are realized. Credit cost is expected to be under 2% for the full financial year, with the second half projected to see lower credit costs than the first.
Advances and Liability Growth
Total advances saw a year-on-year growth of 22%, reaching INR38,752 crores, with secured assets growing at 24%. Disbursements in Q2 were up 7% year-on-year. On the liability side, CASA growth was 13% year-on-year, with a commitment to improve CASA balances in the second half. The bank maintains a stable cost of funds at 7.4%, with 96.1% of deposits being for one year or longer.
Financial Highlights and Outlook
The bank’s ROA improved to 1.4%, and ROE is close to 14%. The cost-to-income ratio has reduced from 67% in Q1 to 64.3% in Q2, with a target to reach 60%. Several new products and initiatives are planned, including employee POC for Credit Line on UPI, loans against shares and mutual funds, and trade FX services. The bank expressed confidence in its strategy and trajectory, expecting a strong year of performance.
Source: BSE
