Highlights rationale behind recent large-scale capital raise, positioning it as strategic for future growth and scale transformation, drawing parallels with ICICI Bank's historical trajectory.

“People ask why we raised such a large amount of capital, diluting by around 15%... If you see ICICI Bank’s early years, significant capital raises transformed its scale. Similarly, we're at an early stage as a converted DFI and must invest aggressively. We raised ₹21,000 crore in five years, but going forward, this will allow us to scale significantly. We now have ₹7,500 crore coming through CCPS, convertible into equity at ₹60 or above after trading there for 45 consecutive days, which substantially boosts our capital adequacy to around 18.2% and CET1 to 16%.”

— V. Vaidyanathan, CEO & MD

Indicates disciplined expense management, highlighting a deliberate strategy to achieve operating leverage by maintaining lower operating expense growth relative to asset expansion, enhancing margins.

“We achieved significant moderation in operating expenses, with Q4 opex growth at just 12.2%, against our asset growth of about 20%. Looking forward, despite continuing loan and deposit growth of 20-22%, we are setting an aggressive internal target to hold opex growth at around 12-13% annually. This will drive meaningful operating leverage and margin improvement.”

— V. Vaidyanathan, CEO & MD

Acknowledges significant contraction in the microfinance portfolio amid elevated credit costs, but signals optimism about improving asset quality indicators, suggesting peak stress may be easing and incremental slippages likely to moderate going forward.

“Our microfinance business has contracted by approximately 28% during FY25 due to continuing sector-wide challenges, with credit costs remaining high around 10.5%. Next year, we expect microfinance exposure to further shrink to 3-3.5% of total loans, as we remain extremely cautious given current market volatility.”

— Sudhanshu Jain, CFO

“In microfinance, early delinquency (SMA-0) loans sharply declined from ₹275 crore in December to ₹152 crore in March, clearly indicating peak stress is behind us. Collection efficiency also rebounded strongly to 99.4%, closer to pre-stress levels, suggesting incremental slippages should materially reduce going forward.”

— V. Vaidyanathan, CEO & Managing Director

Management attributes sharp dip in profits primarily to challenges in the microfinance segment, emphasizing that this setback is temporary rather than indicative of structural weaknesses, guiding for a clear recovery trajectory from FY26 onward.

“So instead of our PAT going up from Rs. 2,400 crores to Rs. 2,900 crores upwards, we did a downturn this year. I do agree. So it's down to about Rs. 1,500 crores. So I want to share with you that this dip is not that there's any fundamental issue with the bank or the model where it's going to go cutting down this way. No, no, no. The curve is not heading down this way for next 2 years, 3 years, nothing like that.”

“You think of this 2025 as a year that this has happened because of microfinance. You think of it that 2026, we will stage a smart recovery. And FY27, FY28, FY29, we should be back winning ways.”

— V. Vaidyanathan, CEO & MD