Au Small Finance Bank Limited · NSE:AUBANK
Au Small Finance Bank — Investor Presentation (May 2022)
52 slides from Au Small Finance Bank's investor presentation, May 2022
Slide 1: Investor Presentation May 2022: 5 Years of Banking, 27 Years of Building Trust
27 Years of Building Trust 5 Banking Years of INVESTOR PRESENTATION MAY 2022
Slide 2: Our Resilient Franchise has Continued to Thrive as a Bank Despite Multiple Industry Headwinds
Our Resilient Franchise has Continued to Thrive as a Bank Despite Multiple Industry Headwinds FY22 Liability Franchise Liability Franchise Deposits (US$ Bn) / 2yr CAGR: 7.0 / 42% • Built granular US$ 7 Bn+ liability franchise from ground up with 37% CASA: 37% CASA ratio and declining cost of funds C
Slide 3: We have Strengthened During the Pandemic
We have Strengthened During the Pandemic Further Granularized Our Liability Franchise Digitized Our Business Customer New Products Branch Banking Operations Acquisition Retail Deposits % of Total Deposits 43% 66% Mar-20 Mar-22 Salesforce Transition to AU 0101 Credit Cards Digitalization the Cloud CA
Slide 4: AU Bank: Confluence of Scale, Growth, Asset Quality and Profitability with Tech-Led Banking
AU Bank: Confluence of Scale, Growth, Asset Quality and Profitability with Tech-Led Banking US$ 7 Bn / 61% US$ 6.4 Bn / 35% ~2.75 MM 919 Deposits / 4yr CAGR AUM / 5yr CAGR Customer Base Touchpoints 37% 2.0% / 0.5% 19.7% / 21.0% 1.9% / 16.4% CASA Ratio GNPA / NNPA Ratio Tier-1 Ratio / CRAR ROA / ROE
Slide 5: India Opportunity: We Are Being Aided by Strong Structural Tailwinds
India Opportunity: We Are Being Aided by Strong Structural Tailwinds Large Base of Millennials and Gen Z Government Support for Inclusive Growth Green vehicle Push and Vehicles Registration and ~51% of India’s Population comprised of Gen Z and Millennials (1) Scrappage Policy ~US$ 50 Bn Formalizatio
Slide 6: Our Digital Strategy has Added Self-Reinforcing Layers to our Traditional Flywheel
Our Digital Strategy has Added Self-Reinforcing Layers to our Traditional Flywheel Investments in Digital More Higher More and Cross-sell Profitability Capital Digitization First-principles Thinking Higher Operating More Branch Leverage Infrastructure Underwriting Stronger Strength & Customer Lower
Slide 7: Our Digital Products and Services Are Scaling Well
Our Digital Products and Services Are Scaling Well AU 0101 Video Banking Credit Cards QRs ~1 MM 100,000+ 25,000+ 480,000+ Cumulative Registrations Video Banking Savings Monthly run rate of Total QR Codes on AU 0101 (1) Accounts opened (2) credit cards issued (1) installed (1) 590,000+ US$ 53 MM+ 70%
Slide 8: Digital-led Strategy is Delivering Faster Customer Growth While Also Diversifying Our Customer Base
Digital-led Strategy is Delivering Faster Customer Growth While Also Diversifying Our Customer Base Accelerating Customer Acquisitions Cumulative Registrations on AU 0101 Significantly Lower Customer Acquisition Cost (CAC) Cumulative customer Base, # MM # MM 250,000+ Savings Account CAC, Indexed to
Slide 9: Our Key Competitive Moats
Our Key Competitive Moats Deep Understanding of Customers, Credit and Collections Along with the Pull of the Banking Platform 27 years of experience in serving new-to-credit, underserved customer base of self-employed and small merchants in tier-2+ markets Digitally Native Operations with Effective
Slide 10: Our Strategic Priorities
OUR STRATEGIC PRIORITIES 1 Scale retail focused, sustainable liability franchise 2 Drive Sustainable growth from existing products and segments 3 Build a Tech-led ecosystem 4 Strong risk management and controls 5 Develop a highly empowered and capable team 6 Enhance our brand identity 7 Strengthen o
Slide 11: Retail-Focused Liability Franchise
Retail-Focused Liability Franchise
Slide 12: Large, Growing Addressable Deposit TAM
Large, Growing Addressable Deposit TAM Large and Growing Deposit Market Provides AU Bank Massive Room for Growth US$ Bn Total Bank Deposits (Dec-21) Total Bank Deposits US$ 2,158 Bn (Jun-17) US$ 1,433 Bn CAGR: 9.5% AU Bank AU Bank Market AU Bank Deposits (1) Share – 0.3% Deposits (2) US$ 0.1 Bn US$
Slide 13: Growing Urban CASA Customer Base is a Key Priority
Growing Urban CASA Customer Base is a Key Priority Accelerating Acquisitions Unique Approach to Customer Targeting and Deepening Engagement Targeted Geographic Expansion Acquiring High Quality Retail Customers Acquire and Engage Retail Through Premium Offerings (1) Customers Through Differentiated P
Slide 14: Disciplined, Tech-Led Approach to Branch Banking
Disciplined, Tech-Led Approach to Branch Banking Growing Reach via Physical Branches and Improving Density via Clear Execution Principles to Branch Banking Digital Banking Communication & Engagement • Addressing Customer Base 1-2 Through Phy-gital to Increase 1-2 km kms Conversions ` • Expanding Cat
Slide 15: Growing Liability Customer Base Accompanied with Increasing Engagement Levels
Growing Liability Customer Base Accompanied with Increasing Engagement Levels FY19 FY22 New-age Digital Products and Services providing strong Hooks for 2.3x Transacting Customers 336,000+ 781,000+ acquisition and engagement +17% 1 AU 0101 Transacting Customers as % of Total Customers 38% 55% 2 Vide
Slide 16: Driving Diversified, Growing, Urban Deposit Franchise
Driving Diversified, Growing, Urban Deposit Franchise Large Share of Indian Deposits Are Concentrated in Top Rapidly Growing, Granular Deposit Base Metros and Urban Areas US$ MM, % Created specialized verticals to provide customized solutions to various customer segments (Current Accounts, KAM, NRIs
Slide 17: High-Quality Loan Book
High-Quality Loan Book
Slide 18: Large, Underpenetrated Credit Opportunity in India
Large, Underpenetrated Credit Opportunity in India ~US$ 500 Bn Opportunity in MSME Lending 1 Large and Growing Credit Opportunity 2 that is Still ~60% Unaddressed US$ Bn FY21 US$ Bn Total Credit Market US$ 2,092 Bn Total MSME Addressable Credit Demand (2019) US$ 493 Bn (1) FY17 Total Retail Market T
Slide 19: Commercial Banking: Comprehensive Portfolio of Traditional, Secured and Granular Products
Comprehensive Portfolio of Traditional, Secured and Granular Products Addressing Diverse Banking Needs of Our Customers Mar-22 AUM GNPA (as % of Contribution from Avg. Ticket Size Business Unit (1) Vintage Yield % Retail Book (US$ Bn) Gross Advances) Core Markets (2) (US$ 000s) Vehicle 1996 2.3 14.0
Slide 20: Our First Principles-Based Lending Strategy
Our First Principles-Based Lending Strategy Small Ticket Size Secured, Risk-based Pricing Productive, Priority Sector Loans Small ticket financial solutions Disciplined approach to ensure secured loans Large share of loans towards employment addressing multiple banking needs backed by assets at the
Slide 21: We have Built a Truly Secured and Granular Retail Franchise
We have Built a Truly Secured and Granular Retail Franchise 93% + 88% Secured Loan Book Retail Loans (1) Notes: All figures as of Mar-22 1. Retail loans defined as per the RBI definition HIGH-QUALITY LOAN BOOK 21
Slide 22: Resilience of Asset Quality Through Various Cycles
Resilience of Asset Quality Through Various Cycles, Further Aided by Our Underwriting of “New to Credit” Customers DPDs for Major Events across the Cycle DPDs for Overall Portfolio v New to Credit (NTC) Customers 90+ DPD% 90+ DPD% Consistently Controlled and Low DPDs across Distress Events Lower DPD
Slide 23: Our Disciplined and Differentiated Approach has Resulted in Strong, Resilient Collections Across Cycles
Our Disciplined and Differentiated Approach has Resulted in Strong, Resilient Collections Across Cycles Sharp Recovery in Collection Efficiencies Amidst Covid Product-specific Collection Teams % 125% 112% 100% 75% 54% Data-Analytics Driven Decision Making 50% 25% 0% Apr-20 Jul-20 Oct-20 Jan-21 Apr-2
Slide 24: Building a Tech-Led Bank
Building a Tech-Led Bank
Slide 25: Truly Digitized Ecosystem of AU Bank
Truly Digitized Ecosystem of AU Bank RETAIL CUSTOMERS MERCHANTS / CORPORATES AU 0101: Retail Banking Video Banking Merchant QR Codes Corporate Internet Super App Banking Credit Cards and Digitized Vehicle Loans Personal Loans Transaction Banking Merchant Lending and Trade Finance Digital Payments an
Slide 26: AU 0101: Digital Banking and Commerce Super App for Retail Customers
AU 0101: Digital Banking and Commerce Super App for Retail Customers Savings Accounts Credit Cards Seamless, digital new customer onboarding Digitally-issued, new-age Credit Cards XXXXXXXXX ~1,100 ~25,000 Avg. Daily New Savings Accounts (1) Monthly New Credit Cards Run-rate (2) Payments Solution Loa
Slide 27: Video Banking has Demonstrated Strong Momentum
Video Banking has Demonstrated Strong Momentum Increasing Momentum in Gaining Access to Younger, Acquisitions through Video Urban, Salaried Customers Convenient, Secure and Personalized Solution Strong Service Capabilities Banking Through Video Banking 200+ 100,000+ 80% Video Bankers (1) VKYC Saving
Slide 28: Highly Engaging, Digital Journey for Credit Card Customers
Highly Engaging, Digital Journey for Credit Card Customers 1,70,000+ Credit Cards (1) 40% Online Card Easy Online Personalized Xpress EMI Option Management Limit Setting Rewards Credit Cards in Core Markets (1) 57% % e-Commerce Spends on Credit cards (2) 70% Cards Issued without any Manual underwrit
Slide 29: Our QR Code-Led Merchant Acquisition and Retention Engine Scaling Up Meaningfully
Our QR Code-Led Merchant Acquisition and Retention Engine Scaling Up Meaningfully Cumulative QR Codes Installed and New Merchant Acquisitions via QRs # 000s 68% 65% Increase in Avg. Monthly Activation Rate (1) balance post QR install (2) 480 ~US$ 87 MM Credits received in AU Bank Accounts via QR tra
Slide 30: Building an Integrated, One-Stop Digital Bank for Merchants
Building an Integrated, One-Stop Digital Bank for Merchants Advanced Analytics for Digital Collections Business Insights Digital Trade and Supply Online Solutions for Chain Finance Payments, ePOS Merchant Self-service Recurring, Small-Ticket Digital Onboarding Financing Solutions VAS: Accounting, In
Slide 31: We Have Made Investments in Core Technology
We Have Made Investments in Core Technology Data and Transform Cloud Ready Robust API Defense Analytics the Core Infrastructure Backbone in depth Platform (1) • Modular microservices • Enabling Cloud Journey • Scalable platform on • Architecture based on • Cyber resilience based architecture for App
Slide 32: Omni-Channel Touchpoints Across the Banking Platform are Powering Our Data Science Engine
Omni-Channel Touchpoints Across the Banking Platform are Powering Our Data Science Engine Digital Touchpoints Physical Touchpoints AU 0101 App 919 Physical Touchpoints (1) touchpoint data Accelerating Issuances 200+ Video Banking processed by of Digital Loans Team (1) data science engine 130,000+ Cu
Slide 33: Our Board and Management Team
Our Board and Management Team
Slide 34: Our Distinguished Board Members
Our Distinguished Board Members Raj Vikash Verma, Chairman and Independent Director • Has held several leadership positions in the financial services sector including Years of Association as Director of AU Bank CMD at NHB, Officiating Chairman of PFRDA and IMGC • Member of Advisory Committee of IBBI
Slide 35: Leadership with Strong Execution Track Record, Seasoned SBU Management Team and Independent Control Functions
Leadership with Strong Execution Track Record, Seasoned SBU Management Team and Independent Control Functions Years of Experience at AU Bank Sanjay Agarwal Uttam Tibrewal Vimal Jain Manmohan Vivek Tripathi Founder, Executive Chief Financial Parnami Head of Human Managing Director Director Officer Co
Slide 36: Our Independent Governance Framework
Our Independent Governance Framework Board of Audit Committee Directors IT Strategy and Information Systems Security Committee Nomination and Risk Management Committee Remuneration Committee Compliance Risk Information System Audit Fraud Customer Service Committee Whistleblower/Vigilance IT and Cybe
Slide 37: Highly Seasoned Bench Strength of Managerial Experience
Highly Seasoned Bench Strength of Managerial Experience ~350 7+ years 11% Employees of Designation of Average vintage of Senior Attrition at VP and above Vice President or Above Management Team designations in FY22 Note: All figures as of 31-Mar-22 OUR BOARD AND MANAGEMENT TEAM 37
Slide 38: Our Brand Identity
Our Brand Identity
Slide 39: Our Brand Campaign Reflects Our Initiatives
Our Brand Campaign Reflects Our Initiatives Note: “Badlav Humse Hai” brand campaign launched in Aug-21 OUR BRAND IDENTITY 39
Slide 40: Our Brand Campaign Reflects Our Initiatives (Cont'd)
Our Brand Campaign Reflects Our Initiatives (Cont’d) Note: “Badlav Humse Hai” brand campaign launched in Aug-21 OUR BRAND IDENTITY 40
Slide 41: Our Brand Campaign Has Strengthened Our Brand Identity
Our Brand Campaign Has Strengthened Our Brand Identity Garnered Robust Viewership Metrics (till Mar-22) Rise in Unique Visitors on Web platforms 000s 1,986 1,070+ MM 170+ MM Ad Impressions Video Views 234 Mar-22 Apr-21 Increase in Monthly Search Volumes Massive Uptick in Monthly Total Unique Leads 0
Slide 42: Deep ESG Commitment
Deep ESG Commitment
Slide 43: Our Business is Based on Social Principles
Our Business is Based on Social Principles Building up India’s productive asset-base Stepping up efforts to accelerate energy while creating long-term wealth transition by funding clean energy sources (EVs, batteries, solar and CNG vehicles) Loans not for consumption but purely for Large share of po
Slide 44: Our ESG Initiatives Touch Several Key Issues Faced by Our Communities
Our ESG Initiatives Touch Several Key Issues Faced by Our Communities Environment Social Governance Providing income-generating loans, access 4-tiered governance framework ensuring Funding solar projects, electric vehicles, to social security schemes and facilitating prompt, responsive complaint res
Slide 45: Our ESG Achievements
Our ESG Achievements 98% 18,947 MWh 8,000+ 8% % Loans disbursed in FY21 that Electricity saved using 18,000 Freshers & first-time Job seekers Green portfolio in our Vehicle are <US$ 33,300 ticket size, by ACPI enabled devices and hired since bank launch Loans book number Virtualizing of Servers 37%
Slide 46: Extensive Efforts in Increasing Financial Inclusion and Literacy
Extensive Efforts in Increasing Financial Inclusion and Literacy Universal Access to Financial Services Supporting Affordable Housing Financial Literacy & Education 46 US$ 197 MM 2,101 Special Focus Districts (SFDs) already AUM under PM Awas Yojana for Financial literacy camps in rural, semi- under
Slide 47: Financial Overview
Financial Overview
Slide 48: Our Financial Strengths
Our Financial Strengths 1 Granular, Sticky Liability Franchise that Continues to Grow and Provide Cost of Funds Advantage 2 Robust Growth In Loan Book and Disbursements, While Maintaining Strong Yields 3 Consistently Maintaining Highly Stable Spreads 4 Underwriting Expertise Ensuring Strong Asset Qu
Slide 49: Summary Financial Metrics (1/2)
Summary Financial Metrics (1/2) 1 High Quality Liability Franchise 2 Growing Loan Book US$ MM US$ MM 7.7% 6.8% 5.9% 14.7% 14.4% 13.7% 7,011 6,379 5,028 4,797 4,119 3,489 FY20 FY21 FY22 FY20 FY21 FY22 Cost of Funds Yield 3 Stable AUM Spreads (1) 4 Demonstrating Strong Asset Quality % % 80.00% 4.3% 70
Slide 50: Summary Financial Metrics (2/2)
Summary Financial Metrics (2/2) 5 High Tier-1 and Capital Adequacy Ratios… … With Healthy CD Ratio % % 22.0% 23.4% 21.0% 103% 96% 88% 18.4% 21.5% 19.7% 0% FY20 FY21 FY22 FY20 FY21 FY22 Tier 1 Ratio Capital Adequacy Ratio Credit-Deposit Ratio 6 Controlled Cost to Income Ratio (1) 7 Strong Profitabili
Slide 51: Legal Disclaimer
Legal Disclaimer This presentation and the accompanying slides (the “Presentation”) have been prepared by and are the sole responsibility of the AU Small Finance Bank Limited (“Bank”). This Presentation contains selected information about the activities of the Bank as at the date of this Presentatio
Slide 52: Thank You
THANK YOU For Investor queries contact (details in QR Code): Prince Tiwari | Aseem Pant Email: investorrelations@aubank.in 52
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