Suryoday Small Finance Bank Limited conducted its Q3 FY26 earnings conference call on January 23, 2026, presenting financial results for the quarter and nine months ended December 31, 2025. The bank demonstrated strong growth momentum across key business segments while navigating industry-wide challenges in the microfinance sector.

Financial Performance Overview

The bank's gross advances reached Rs. 11,885 crores as of December 31, 2025, representing a robust year-on-year growth of 24.3% from Rs. 9,563 crores in the previous year. This growth was supported by strong disbursement activity, with disbursements excluding Supply Chain Finance totaling Rs. 6,230 crores for the nine months ended December 2025, marking a 30.2% increase from Rs. 4,785 crores in the corresponding period last year.

Business Segment Performance

Inclusive Finance and Microfinance

The inclusive finance segment showed significant recovery with disbursements returning to earlier run rates, now clocking closer to Rs. 500 crores per month. Collection efficiency continued to improve with the current bucket for the inclusive finance portfolio approaching 99.5%. The bank's strategic shift from Joint Liability Group (JLG) model to individual lending gained traction, with individual loans now constituting approximately 72% of the inclusive finance book.

Vikas loan disbursements during 9M FY26 stood at Rs. 2,729 crores, reflecting sustained year-on-year growth. Importantly, close to 99% of the inclusive finance portfolio remains covered under the CGFMU (Credit Guarantee Fund for Micro Units) scheme, providing strong capital protection.

Retail Assets Growth

The commercial vehicle portfolio expanded from Rs. 1,190 crores in December 2024 to Rs. 1,609 crores in December 2025, registering a 35% year-on-year growth. The mortgage book, including micro-mortgages, grew from Rs. 1,999 crores to Rs. 2,778 crores, achieving a 39% year-on-year increase.

Digital Banking Initiatives

The bank's digital transformation showed promising results with digitally sourced deposits contributing nearly 30% of incremental deposit accretion. The Credit on UPI product, launched in partnership with Paytm, demonstrated strong early traction with 2.2 lakh active customers acquired in one quarter. The bank's customer base expanded to nearly 3.7 million as of December 2025 compared to 3.3 million a year earlier.

Asset Quality and Capital Position

As of December 2025, the bank's GNPA ratio stood at 6.6%, with asset quality trends showing signs of stabilization. The CGFMU coverage continues to safeguard the bank's balance sheet, with a 100% claim rate on eligible portfolios since inception. Out of NNPA of Rs. 501 crores as of December 2025, Rs. 467 crores are receivable under various cohorts under the CGFMU scheme.

The bank maintained a strong capital adequacy ratio of 21.9%, well above the regulatory requirement of 15%, providing adequate headroom for future growth. The CASA ratio stood at 21.2%, reflecting improving deposit granularity and franchise depth.

Management Outlook

During the earnings call, management expressed confidence in the bank's trajectory, citing improving repayment behavior, disciplined credit processes, and easing portfolio stress. The leadership expects the coming quarters to mark a phase of stability and consolidation, setting the stage for healthier and more balanced growth in FY27. With a largely CGFMU-covered unsecured book and growing retail assets across commercial vehicles and mortgages, the bank believes it is well-positioned for sustainable long-term growth.

Suryoday Small Finance Bank announced its unaudited financial results for the quarter and nine months ended December 31, 2025, showing mixed performance with profit growth offset by rising asset quality concerns. The bank's board of directors, meeting on January 22, 2026, approved the results and several strategic initiatives including a significant fundraising plan.

Financial Performance Overview

The bank reported steady growth in key financial metrics for Q3 FY26. Net profit increased to ₹36.56 crores compared to ₹33.30 crores in Q3 FY25, representing a 9.8% year-on-year growth. For the nine-month period ended December 31, 2025, net profit stood at ₹102.25 crores compared to ₹148.75 crores in the corresponding period last year.

Asset Quality Concerns

The bank's asset quality showed deterioration during the quarter. Gross NPAs increased to ₹790.35 crores from ₹528.95 crores in Q3 FY25, while net NPAs rose to ₹501.06 crores from ₹292.32 crores in the same period last year.

Capital Position and Ratios

The bank maintained a strong capital adequacy ratio of 21.94% as of December 31, 2025, compared to 26.92% in the corresponding quarter last year. The bank's return on assets for the quarter stood at 0.22% compared to 0.24% in Q3 FY25.

Board Approvals and Strategic Initiatives

The board approved several significant proposals that will be put to shareholders through postal ballot:

Fundraising Initiative:

• Approval to raise up to ₹1,000 crores through various modes including preferential allotment, qualified institutions placement (QIP), private placement, rights issue, or combination thereof

Leadership Continuity:

• Re-appointment of Mr. Krishna Prasad Nair (DIN: 02611496) as Non-Executive Independent Director for three years effective July 22, 2026

Segment Performance

The bank's retail banking segment continued to be the primary revenue driver, contributing ₹581.49 crores to total segment revenue in Q3 FY26. The treasury segment contributed ₹72.35 crores, while corporate banking added ₹41.14 crores to the overall performance.

Regulatory Compliance

The bank confirmed full compliance with regulatory requirements, stating no defaults on loans or debt securities. The financial results were prepared in accordance with applicable accounting standards and RBI guidelines, with an unmodified review report issued by joint statutory auditors Mukund M. Chitale & Co. and Gokhale & Sathe.