Equitas Small Finance Bank shares hit record high after lender reports 36.5% growth in Q1 loans

Equitas Small Finance Bank shares registered a record high on Wednesday, after the lender reported strong growth in loans and deposits in the quarter ended June 2023. The Equitas Small Finance Bank stock — traded on the bourses BSE and NSE with the symbol EQUITASBNK — gained by as much as Re 1.4 or 1.5 per cent to Rs 92.5 apiece on BSE, its highest intraday level ever. 

The record high in Equitas Small Finance Bank shares came on a day when domestic equity benchmark Nifty staged a fifth straight record closing high, though it lost steam owing to selling pressure in financial stocks.  

The EQUITASBNK stock finished the day with a gain of 0.4 per cent at Rs 91.6 apiece.

All eyes on Dalal Street are on the onset of the corporate earnings season in the country due next week for domestic cues.  

What's driving Equitas Small Finance Bank (EQUITASBNK) shares? 

Equitas Small Finance Bank reported year-on-year growth of 36.5 per cent in gross loans to Rs 29,603 crore for the quarter ended June 30, 2023. Its total deposits increased 35.9 per cent to Rs 27,709 crore, according to a regulatory filing. 

The bank's CASA ratio — or the proportion of deposits in current accounts and savings accounts to total deposits — came in at 38 per cent for the final quarter of the first three months of the financial year 2023-24, as against 42 per cent for the previous quarter and 52 per cent for the quarter ended June 2022, the lender said, citing provisional data. 

The CASA ratio is a key metric that determines the availability of relatively cheaper cash to a financial institution in the form of deposits. The higher the CASA ratio the lower the cost of funds, and vice versa. 

Equitas Small Finance Bank said its cost of funds was at 6.94 per cent for the June quarter as against 6.20 per cent for the year-ago period.    

Motilal Oswal Financial Services has a 'buy' call on Equitas Small Finance Bank with a target price of Rs 105.

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