Mumbai, Jan 3 (IANS): As per the rating agency's report, even as the growth in portfolio is expected to drive an improvement in revenue, the expected elevated credit costs are likely to keep the profitability subdued in FY22.

Besides, ICRA maintained its cautious stance, as the recent surge in Covid-19 infections could play a spoilsport and impact the recovery in growth.

Amid the second wave of the pandemic, SFBs witnessed decline in collections as well as quality metrics of the assets.

"Credit costs are expected to remain elevated in FY22 as well, which would keep the profitability subdued. Over the long term, SFBs' ability to improve the operating efficiency further and control the credit costs would be imperative for improving the return," said Sachin Sachdeva, Vice President and Sector Head, Financial Sector Ratings at ICRA.

Further, the overall risk profile of SFBs' portfolio remains high given the higher proportion of unsecured loans despite their foray into retail asset classes such as vehicle loans, business loans, loan against property and housing finance over the last few years.