SBFC Finance has released the transcript of its Q2 and H1 FY’26 earnings conference call. The company reported an AUM of ₹9,938 crore as of September 2025 and has since crossed ₹10,000 crore. MSME AUM grew 29% YOY and 6% QOQ. The company is cautiously optimistic about delivering 5% to 7% quarter-on-quarter growth, though credit costs may inch up another 10-15 basis points before peaking.
AUM Growth and Branch Expansion
As of September 2025, SBFC Finance’s Assets Under Management (AUM) reached ₹9,938 crore, and has since crossed the ₹10,000 crore mark. This represents a growth of 29% year-over-year (YOY) and 6% quarter-over-quarter (QOQ). The MSME AUM, which constitutes 82% of the total AUM, also experienced a growth of 29% YOY and 6% QOQ. During the quarter, SBFC Finance expanded its branch network by adding five new branches, bringing the total count to 220 as of September 2025.
Yield, Spreads, and OPEX
The yield for the quarter stands at 18.01%, reflecting an improvement of 2 basis points QOQ and 32 basis points YOY. The cost of borrowing for the quarter is 8.96%, with a reduction of 36 basis points both YOY and QOQ. The resulting spread for the quarter is 9.05%, showing an improvement of 38 basis points QOQ and 68 basis points YOY. Enhanced operating leverage led to an improvement in OPEX by 19 basis points QOQ and 20 basis points YOY, despite the expansion of the branch network.
Asset Quality
The company’s Gross Non-Performing Assets (GNPA) remained relatively stable at 2.77% in Q2, with a Provision Coverage Ratio (PCR) of 46.17%. Credit costs for the quarter were reported at 1.29%. The Capital Adequacy Ratio (CAR) is strong at 34.05%, and the tangible net worth stood at ₹3,174 crore as of September 2025. The Return on Average AUM for the quarter is 4.56%, and the Return on Average Tangible Equity further improved to 14.09%. SBFC Finance reported a Profit After Tax (PAT) of ₹109 crore for the quarter, reflecting a growth of 30% YOY and 8% QOQ.
Future Outlook and Strategy
SBFC Finance anticipates a quarter-on-quarter AUM growth of 5% to 7%. The company also anticipates that credit costs may increase by another 10 to 15 basis points from current levels before stabilizing. SBFC Finance has tightened credit screens, stopped lending below ₹7 lakh, and raised the minimum CIBIL score to 700. The company has a cautious outlook on Karnataka, where it holds close to 11%-12% of its portfolio.
Source: BSE
