I take pride in announcing that FY 2019 has been the second successive year of remarkable achievements for your Bank. The significant financial achievements continued to create new milestones during the year, putting us on a firm footing on the operational front. The performance epitomizes the renewed Vision 2.0 of the Bank at work. A glimpse of your Bank’s performance during the year is as under:
- Asset Base registered annual growth of 43.2%, reaching a new peak of ₹ 1,55,861 crore as at the end of FY 2019 and doubled over a period of 2 years
- Loans & Advances grew by 42.9% and was ₹1,36,230 crore as at the end of FY 2019, complementing the 19.13% growth clocked by SCBs in MSME credit
- Backed by a robust increase in Interest Income, Total Income recorded a 50.2% growth
- Net Profit scaled an all-time high of ₹1952 crore and that too at a faster growth rate of 36.5%, as against 27.5% in previous year
- The intense focus on asset quality resulted in improved GNPA for the second successive year from 0.94% to 0.63%
- The shareholders’ metrics have improved viz. ROE, ROCE and EPS have increased from 10.2%, 10.2% & ₹26.87 during previous year to 12.59%, 12.57% & ₹36.70 respectively as at the end of FY 2019
How we did it
The commendable growth has been driven by the Institutional Finance book, which has registered sustained growth of around 48% during each of the last 2 FYs. It was directed largely to PSBs, apart from SFBs and well rated NBFCs, thus covering the larger masses especially at the bottom of the pyramid. The Bank, therefore, registered 181% Y-o-Y growth in refinance outstanding to PSBs in FY 2019.
The Bank embraced volume driven rather than margin driven business orientation as a strategy to ensure sustained business growth; this resulted in 53.4% rise in Interest Income, thus giving a 36.5% push to Net Profit, on Y-o-Y basis.
Pillars of the growth story
The Direct Lending operations of the Bank have continued to witness product & process revamp during the year through innovative and simplified product lines, new partnerships, higher new customer acquisitions, faster credit delivery and smaller ticket sizes of loans. There was a two-fold increase in new customers and 11.4% growth in overall customer base. Also, Hub & Spoke model at 6 major business centres was introduced.
Over the years, the Microfinance operations of the Bank have helped fledgling MFIs to upscale through finance, capacity building support, corporate governance enhancing measures and policy advocacy; the Bank has been part of the transformation journey of partner MFIs to SFBs/ Universal Bank.
During the year, a strategic shift was made in Microfinance operations through the PRAYAAS initiative, which is a first-ever effort to deliver “affordable credit” to the small entrepreneurs, especially women, at the bottom of the pyramid. This will be in partnership with institutions having ground level presence.
Your Bank has always been at the forefront in promoting intermediary institutions showing promise in making a positive difference to the MSME credit ecosystem. One such attempt was the pilot scheme to finance new-age Fintech NBFCs, thus supporting them in their stabilization phase.
As they say, what India needs is more of innovative and technological entrepreneurship. These ventures, if nurtured well, can achieve scale, become globally competitive and serve as true employment hubs apart from creating economic value. During the year, your Bank focused on the Fund of Fund operations, with particular focus on the GoI sponsored Fund of Funds for Startups (FFS). Under FFS, as on September 30, 2019, against the aggregate commitment of ₹3,123 crore, the Bank has provided support of ₹599 crore to Alternate Investment Funds (AIFs), which has resulted in investment of ₹2,346 crore in 266 Startups. The Bank has introduced various process enhancements in the Scheme and introduced platforms like Investors’ Day to support Startups through match making with AIFs. The MSME Venture Capital arena would see more benefits by way of a State of the Sector Report initiated by the Bank and the Impact Study of FFS, all aimed to devise means for bringing robustness & objectivity into venture funding.
The Macro economy
FY 2019 and the half year into September 2019 have been a mixed bag for the Indian economy. The second successive political mandate promises political stability and a host of sector friendly initiatives. This is critical in the light of the fact that the economy after clocking significant growth during the first half of FY 2019, was impacted by global trade war tension and consumption slowdown in the domestic economy.
The 50% growth in GDP from $2 trillion in FY 2014 to $3 trillion in FY 2019 bears testimony to the fact that structured Govt reforms, coupled with “inclusive participation”, make the envisaged vision realizable. This sets the tone for the plan of action that would lead the country to the Hon’ble Prime Minister’s “challenging but achievable” vision to make India a $5 trillion economy by 2024.