Focused on Financial Health, ESAF Plans ₹735 Crore NPA (Non-Performing Assets) Transaction

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ESAF Small Finance Bank Ltd has sanctioned sale of written-off loans and non-performing assets worth a pool of ₹735 crore as a part of its ongoing effort to improve asset quality and financial resilience.

Key Highlights

₹735 Crore NPA Pool Identified: The bank has approved the sale of stressed assets and bad loans, with an eye on selling legacy NPAs and easing the strain on its balance sheet.

Strategic Cleanup Drive: This follows a series of asset quality improvement efforts, such as technical write-offs and pre-pandemic asset sales, to offset the residual drag from pandemic-period delinquencies.

Enhanced Asset Quality Outlook: ESAF's gross NPAs had risen to ₹998 crore in Q4 FY24, but now the bank has indicated a decelerating trend of slippages and is anticipating a sharp decline in bad loans in FY25.

Growth Amidst Challenges: Despite the asset quality challenges, ESAF achieved a 21% YoY AUM growth to ₹19,765 crore and a 35% deposits growth, with a healthy net interest margin of 11%.

Investor Confidence: NPA sale will be likely to boost capital efficiency, improve provisioning coverage, and improve investor confidence before any future fund-raising or expansion plans.

This bold action demonstrates ESAF's dedication towards financial prudence and growth with stability, positioning the bank for improved post-cleanup performance.

Source: CNBC TV18, ESAF Investor Disclosures, CARE Ratings