Capital Small Finance Bank Q2 profit rises 31% to Rs 46 crore

Capital Small Finance Bank reported profit after tax of Rs 46 crore in Q2FY27, up 31% year on year from Rs 35 crore. Capital SFB’s earnings growth coincided with 24% growth in net interest income to Rs 139 crore, other income of Rs 30 crore, a 4.24% net interest margin and credit cost of 0.18%.

How did Capital SFB’s Q2FY27 profit change?

Capital SFB’s reported profit after tax rose by Rs 11 crore year on year to Rs 46 crore in Q2FY27, from Rs 35 crore in Q2FY26. Profit was also above Rs 41 crore in Q1FY27, while pre-provision operating profit increased 31% year on year to Rs 68 crore from Rs 52 crore.

Capital SFB reported first-half profit after tax of Rs 87 crore in H1FY27, compared with Rs 67 crore in H1FY26. Net interest income, or NII, reached Rs 272 crore in the first half versus Rs 221 crore a year earlier, and pre-provision operating profit increased to Rs 133 crore from Rs 104 crore.

Capital SFB’s operating expenses rose to Rs 101 crore in Q2FY27 from Rs 83 crore in Q2FY26, while provisions and contingencies increased to Rs 22 crore from Rs 16 crore. Provisions were lower than Rs 23 crore in Q1FY27, even as pre-provision operating profit increased from Rs 65 crore sequentially.

What lifted Capital SFB’s margin and non-interest income?

Capital SFB’s net interest margin, or NIM, rose to 4.24% in Q2FY27 from 4.04% in Q2FY26 and 4.21% in Q1FY27. Capital SFB calculates NIM as net interest income, or interest income less interest expense, divided by average total assets.

Capital SFB’s yield on advances was 11.0% in Q2FY27, unchanged from Q2FY26 and above 10.9% in Q1FY27. Cost of deposits was 5.7%, below 5.9% a year earlier but above 5.6% in the preceding quarter; the more detailed deposit-cost measure was 5.68%, against 5.92% in Q2FY26.

Capital SFB recorded other income of Rs 30.2 crore in Q2FY27, compared with Rs 23.7 crore in Q2FY26 and Rs 26.1 crore in Q1FY27. Advance-related fee income was Rs 12.1 crore, up from Rs 9.1 crore a year earlier, while banca commission was Rs 10.2 crore, compared with Rs 8.6 crore.

Capital SFB’s operations-related fee income increased to Rs 6.7 crore in Q2FY27 from Rs 5.3 crore in Q2FY26. Non-interest income, measured as a share of average assets, rose to 0.92% from 0.86%, while forex and treasury income was Rs 1.2 crore against Rs 0.7 crore a year earlier.

How did Capital SFB’s costs and returns move in Q2FY27?

Capital SFB’s operating margin improved to 2.08% of average assets in Q2FY27, from 1.88% in Q2FY26 and 2.04% in Q1FY27. Its cost-to-income ratio was 59.8%, down from 61.7% a year earlier but 0.3 percentage points above 59.5% in the prior quarter.

Capital SFB’s credit cost, calculated as a percentage of average assets, was 0.18% in Q2FY27, compared with 0.20% in Q2FY26 and 0.31% in Q1FY27. The quarter’s Rs 22 crore of provisions and contingencies was Rs 6 crore above the year-earlier amount and Rs 1 crore below the prior-quarter amount.

Capital SFB’s return on average assets, or RoA, reached 1.39% in Q2FY27, compared with 1.26% in Q2FY26 and 1.30% in Q1FY27. Return on average equity, or RoE, was 12.23%, up from 10.22% a year earlier, while return on average risk-weighted assets was 2.37%, compared with 2.23%.

What do Capital SFB’s funding and balance-sheet figures show?

Capital SFB’s deposits stood at Rs 10,831 crore in Q2FY27, up 16% from Rs 9,317 crore in Q2FY26 and 2.2% from Rs 10,596 crore in Q1FY27. Current account and savings account, or CASA, deposits were Rs 3,734 crore, producing a CASA ratio of 34.5%, compared with 34% in Q2FY26.

Capital SFB’s advances reached Rs 9,633 crore at H1FY27, a 23% increase from Rs 7,801 crore at H1FY26 and above Rs 8,952 crore in Q1FY27. Its average credit-to-deposit ratio rose to 85.4% in Q2FY27 from 81.5% a year earlier, while its outstanding credit-to-deposit ratio increased to 90.1% from 84.9%.

Capital SFB’s deposits represented 80.9% of its funding mix in Q2FY27, compared with 81.5% in Q2FY26, while borrowings accounted for 6.5%, up from 5.0%. The capital-to-risk-weighted-assets ratio, or CRAR, was 20.8%, and core CRAR was 18.5%, compared with 24.2% and 20.9%, respectively, a year earlier.

Capital SFB’s liquidity coverage ratio was 216.5% in Q2FY27, compared with 234.9% in Q2FY26. Shareholders’ funds increased 9% year on year to Rs 1,523 crore at H1FY27, and book value per share was Rs 335, versus Rs 307 at H1FY26.

Conclusion

Capital SFB’s Q2FY27 profit increase combined higher NII of Rs 139 crore, other income of Rs 30.2 crore and an operating-margin improvement to 2.08%. RoA rose to 1.39% and RoE to 12.23%, while credit cost declined to 0.18%, despite provisions and contingencies increasing to Rs 22 crore from Rs 16 crore a year earlier.

Management’s Vision 2029 sets an advance-book objective of more than Rs 16,000 crore by FY29, compared with Rs 9,755 crore in the Q2FY27 update. Management also states an endeavour to achieve RoA above 1.6% and RoE above 15.0%, while seeking to keep net non-performing assets below 1.0% and credit cost below 0.3%; the Q2FY27 update showed 1.12% and 0.18%, respectively.