Au Small Finance Bank Limited · NSE:AUBANK
Au Small Finance Bank — Q4 FY23 Earnings Presentation
56 slides from Au Small Finance Bank's earnings presentation, 2023
Slide 1: Q4 FY23 Presentation
BADLAAV au SMALL FINANCE BANK PRESENTATION YEARS OF Q4’ FY23 BUILDING TRUST Sustainable Business Model | Retail Focused | Tech-Led | Customer Centric | Well Governed
Slide 2: About AU
About us About AU Liabilities Update Other Key Updates
Slide 3: AU's Journey
AU’s Journey Started Expanded Equity Received Launched Received AD- I operations operations investment SFB Digital Bank, License from from Jaipur as to from IFC License Video Banking RBI Vehicle Maharashtra from RBI Credit Cards Financing Started Housing Finance Co in Capital Raise of 2003 2008 2011
Slide 4: AU's Recognition
AU’s Recognition Certificate of Recognition Silver Shield Best Small for Excellence in Finance Bank Corporate Governance ICAI Award for Excellence in Financial Reporting, 2021-22 At 22nd National Awards of in the Private Sector Bank By BT- KPMG ICSI, 2022 category 2021-22 2021, 2022, 2023 Best Techn
Slide 5: AU's Consistent performance for 6 years
AU’s Consistent performance for 6 years Touchpoints Employees Customers (in Lacs) 17% 20% 1,027 39% 38.6 919 27,817 28,320 744 22,484 27.5 647 558 17,112 20.2 474 12,623 17.2 11,151 12.3 7.5 FY18 FY19 FY20 FY21 FY22 FY23 FY18 FY19 FY20 FY21 FY22 FY23 FY18 FY19 FY20 FY21 FY22 FY23 ₹ in Crores Deposit
Slide 6: AU's Consistent performance for 6 years
AU’s Consistent performance for 6 years ₹ in Crores Net Interest Income PAT Shareholders Fund 37% 37% 36% 4,425 1,428 10,977 1,130 3,234 7,514 2,365 6,275 1,909 596 600 # 1,343 382 4,377 940 292 3,163 2,281 FY18 FY19 FY20 FY21 FY22 FY23 FY18 FY19 * FY20 * FY21 * FY22 FY23 FY18 FY19 FY20 FY21 FY22 FY
Slide 7: AU's Asset quality
AU’s Asset quality ₹ in Crores Particulars FY18 FY19 FY20 FY21 FY22 FY23 Gross Advances 13,413 22,994 27,233 35,356 46,789 59,158 Gross NPA 270 470 458 1,503 924 981 NPA Provision 100 176 240 747 694 736 Net NPA (incl. floating provision) 169 295 217 755 231 245 Gross NPA % 2.01% 2.04% 1.68% 4.25% 1
Slide 8: AU's Learnings of last 6 years
AU’s Learnings of last 6 years Madness to Method Borrower to Customer KYC to UYC Quantity to Quality Unified Market to Differentiated approach for Core and Urban Transactional approach to Generational orientation Consistently challenging the status quo to improve customer and employee experience 8
Slide 9: AU's 7 strategic priorities
AU’s 7 strategic priorities Scale retail focused, Drive Sustainable growth Build a Tech- Strong risk sustainable, low-cost deposit from existing asset led ecosystem management & franchise products & segments controls Develop a highly Create strong Strengthen our empowered and capable brand identity
Slide 10: AU's 10 SBUs to execute the strategy
AU’s 10 SBUs to execute the strategy ❑ Each BU has o Its own vertical structure supported by shared horizontals like HR, Finance, MIS etc. o Its own growth strategy and approach to drive Bank’s long-term Objectives and Strategic Priorities o Its own Revenue and Cost tracking o Via, AU Insights prese
Slide 11: AU's Geographical presence
AU’s Geographical presence 21 States and 3 UTs 1,027 Touchpoints 241 Districts 711 Locations 493 ATMs Touchpoints Break-up J&K 2 HP 15 29% Punjab 52 Chandigarh 3 Uttarakhand 1 Haryana 52 Delhi 37 71% UP 19 (+1) Rajasthan Assam 1 398 (+4) Bihar 1 Urban Core MP 135 (+1) Jharkhand 1 AU Gujarat Asset We
Slide 12: AU's Business model - deposits from Urban markets and lending in Core markets
AU’s Business model - deposits from Urban markets and lending in Core markets Deposits Break up Advances Break up 22% 37% (23%) (23%) (36%) 0.4% 0.4% Market Urban Core Market share share 78% 63% (77%) (64%) 2% Rajasthan 1% 3% 2% 2% 3% 1% 2% Maharashtra 1% Delhi 4% Punjab 31% 7% Haryana 17% 35% Gujar
Slide 13: AU's Shareholding pattern
AU’s Shareholding pattern Others Employees* Promoter & Promoter Group 3.6% 3.9% Public 6.7% 25.5% FII holding 40% Domestic holding 60% Mutual Fund 11.5% Foreign Institutional Investors (FII) 39.7% AIF 5.6% Insurance 3.5% As on 31st Mar’23; *Employees shareholding includes shareholding of Employees,
Slide 14: AU's Board of Directors
AU’s Board of Directors Mr. Raj Vikash Verma Chairman and Independent Director 40+ years of experience Masters in Economics, MBA (FMS), CAIIB Ex-Chairman at NHB Held leadership positions at IMGC, CERSAI, PFRDA, etc. Independent Directors Executive Directors Mr. Kamlesh Vikamsey Ms. Kavita Venugopal
Slide 15: Agenda
Management Update Assets Update Operating & Financial Highlights Tech Update Liabilities Update Other Key Updates
Slide 16: 1. Management Update
1. Management Update Profitability remains resilient with RoA at 1.8% % and RoE at 15.4 for FY23 Board recommends dividend of ₹1 per equity share (10% of face value) for FY23 Awarded Silver Shield at ICAI Award for Excellence in Financial Reporting, 2021-22 in Private Sector Bank category Recognised
Slide 17: Key Messages
❑ FY23 was challenging year for business planning with uncertainty around inflation, liquidity and interest rates; the complex macro-environment was balanced by strong credit demand and robust asset quality ❑ Bank has been working on a calibrated strategy to build a very sustainable business model,
Slide 18: Key Messages
❑ We have navigated the first 6 years relatively well despite the macro headwinds like Demonetization, GST implementation, NBFC & private Banking events and COVID-19 pandemic ❑ We are investing to build capabilities and thus our cost to income levels can be high. However, over next 3-4 years, some o
Slide 19: FY23 Performance snapshot
FY23 Performance snapshot Operating performance ❑ Core operating performance remained strong without any one-offs (like Treasury income, PSLC fee ₹ 69,365 Cr etc.), despite the sharp rise in interest rates and while continuing to invest for the future Deposits +32% YoY ❑ Disbursement remained strong
Slide 20: Our digital proposition is scaling well
Our digital proposition is scaling well AU 0101 Video Banking Credit Cards UPI QRs 19+ Lacs 2.9 Lacs+ 5 Lacs+ 1 million+ Digital customers Digital Savings Accounts Live cards QR Codes installed 1.1 million 1,150 Cr+ 64% 68% Monthly Active Users Total Relationship Value Cards issued to NTB QR Activat
Slide 21: AD-I License: Opportunity and preparedness
AD – I License : Opportunity and preparedness • Buyer’s and Supplier’s credit • Export Credit – pre & post shipment • FCY bill discounting • NRI Banking – NRO A/c, FCNR(B) • FCY – forwards and hedges deposits, inward remittance Trade Products • Arrange long term FCY credit • Retail – Forex cards, re
Slide 22: 2. Operating & Financial Highlights
2. Operating & Financial Highlights Calibrated growth in assets (26% YoY) and liabilities (32% YoY) with focus on operational efficiency For FY23, NII up 37% YoY & Core PPoP up by 23% FY23 PAT grew by 26% YoY NIM for the full year at 6.1% incl. securitised book
Slide 23: FY23 Financial highlights
FY23 Financial highlights Net Interest Income Total Income PAT ₹ in Crores 9,240 1,428 4,425 1,130 6,915 3,234 FY22 FY23 FY22 FY23 FY22 FY23 Yield on Advance Cost of Funds Net Interest Margin1 RoA RoE Vs Vs Vs Vs Vs 13.7% 5.95% 6.1% (5.7%) 1.9% 16.4% (31st Mar’22) (31st Mar’22) (31st Mar’22) (31st M
Slide 24: Quarterly trends of key parameters
Quarterly trends of key parameters Customers Employees Shareholders’ Funds Total B/S Assets (in Lacs) (in 000s) 38.6 35.7 29.9 90,216 33.3 27.8 28.7 28.3 10,540 10,977 30.7 27.8 10,114 77,878 80,703 27.5 69,078 71,041 7,514 7,789 Q1'FY23 Q3'FY23 Q4'FY22 Q2'FY23 Q4'FY23 Q1'FY23 Q3'FY23 Q4'FY22 Q2'FY2
Slide 25: Quarterly trends of key parameters
Quarterly trends of key parameters ₹ in Crores Net Interest Income Total Income PAT 2,608 425 1,213 393 1,153 2,413 1,083 346 343 976 2,240 937 1,978 1,979 268 Q1'FY23 Q4'FY22 Q3'FY23 Q2'FY23 Q4'FY23 Q1'FY23 Q1'FY23 Q3'FY23 Q3'FY23 Q4'FY23 Q4'FY23 Q4'FY22 Q2'FY23 Q4'FY22 Q2'FY23 Net Interest Margin
Slide 26: Yield and spreads
Yield and spreads Gross Advances Spreads 13.4% 13.3% 13.3% 13.4% 13.4% 7.7% 7.5% 7.5% 7.4% 7.1% 6.0% 6.3% 5.7% 5.7% 5.8% Q4'FY22 Q1'FY23 Q2'FY23 Q3'FY23 Q4'FY23 Gross Advance Yield Average COF Spread ❑ Average Cost of funds for FY23 is at 5.96% (increased by 1 bps) from 5.95% in FY22; CoF is calcula
Slide 27: Profit & Loss statement
Profit & Loss statement (All Figures in ₹ Crore) FY23 FY22 Y-o-Y Q4'FY23 Q4'FY22 Y-o-Y Q3'FY23 Q-o-Q In FY23 : Income Interest Earned ❑ Core PPoP growth is robust at 23% YoY 8,205 5,922 39% 2,275 1,667 36% 2,118 7% Interest Expended 3,780 2,688 41% 1,062 730 45% 965 10% led by NII growth of 37%; ove
Slide 28: Balance sheet
Balance sheet ₹ in Crores 31st Mar'23 31st Mar'22 Y-o-Y 31st Dec'22 Q-o-Q ❑ A stable and healthy balance sheet led by Liabilities Shareholders Fund 10,977 7,514 46% 10,540 4% o Capital adequacy ratio of 23.6% Deposits 69,365 52,585 32% 61,101 14% Borrowings 6,299 5,991 5% 6,191 2% o Borrowings accou
Slide 29: Other Income
Other Income ₹ in Crores FY23 FY22 Y-o-Y Q4'FY23 Q4'FY22 Y-o-Y Q3'FY23 Q-o-Q Loan Assets Processing & Other fees 637 425 50% 183 163 12% 171 7% General Banking, Cross Sell & Deposit related fees 210 152 38% 70 50 40% 52 35% PSLC fees 56 225 -75% 17 80 -79% 14 20% Credit card related fees and Charges
Slide 30: Operating expense movement
Operating expense movement ₹ Crore ❑ The above figures are approximations basis internal estimates and are only for providing a broad understanding in the operating expense movement ❑ There is a inflationary pressures in operating costs and remains a key monitorable ❑ Bank has been investing in stre
Slide 31: SBU profitability – FY23
SBU profitability – FY23 Credit Card & Investments Regulatory Retail Banking Commercial Total Loan Total B/S Overall Business Segments Liabilities Other Digital other than Cost (CRR, Assets Banking Assets Assets Assets Total PAT Initiatives Regulatory SLR & LCR) Gross Advance proportion 78% 22% 100%
Slide 32: Profitability ratios
Profitability ratios Cost to Income (%) RoA (%) RoE (%) 61.3% 61.2% 63.1% 63.1% 63.0% 62.5% 57.1% 59.1% 2.2% 18.9% 2.0% 1.9% 1.8% 15.8% 16.4% 15.4% Q4'FY22 Q4'FY23 FY22 FY23 Q4'FY22 Q4'FY23 FY22 FY23 Q4'FY22 Q4'FY23 FY22 FY23 Cost to Income ratio Core Cost to Income Ratio RoA Components NII (%) Othe
Slide 33: 3. Liabilities Update
3. Liabilities Update CASA deposit grew 36% YoY, CASA ratio at 38%; CASA + Retail TD at 69% % CD Ratio at 84% CoF for Q4’FY23 at 6.29%; FY23 at 5.96% Securitized assets worth ₹ 3,064 Cr during Q4’FY23
Slide 34: How has the Branch Banking charter evolved in last 6 years?
How has the Branch Banking charter evolved in last 6 years? Structure Deposits Liability Branches* Consolidated Unit of 7,923 7,923 41% 17% Mar'18 2017-18 Liabilities Mar-18 80 212 14 Garner deposits with customer mix ranging from Government, Co-operative Banks, Retail Customers etc Mar'20 12,989 13
Slide 35: Deposits snapshot
Deposits snapshot Focus on granular deposits and customer profiles ₹ in Crores Total Deposits 52,585 54,631 58,335 61,101 69,365 CD Book 1,506 1,224 588 546 631 5% 5% 4% 4% 4% 3,680 11% 9% 11% 10% TASC 13% 2,819 10% 11% 8% 11% 2,867 12% 2,211 Banks 12% 13% 12% 2,569 22,980 14% 14% 20,652 21,807 Govt
Slide 36: Building a Predictable, Scalable and Sustainable deposit franchise
Building a Predictable, Scalable and Sustainable deposit franchise Expanding Distribution ❑ Differentiated approach for Urban and Core markets o Branch expansion led by Urban Markets (+58 in FY’23) ❑ Now a Pan India Bank with Presence in 21 states & 3 UT’s o From Jammu to Kochi & Mumbai to Assam ❑ B
Slide 37: 4. Asset Business Update
4. Asset Business Update Sustainable and Scalable business model; 88% loans retail & 92% loans secured Restructured book reduced to 1.2% GNPA ratio continue to gradually decline to 1.66% vs 1.81% QoQ PCR at 75% (78% including technical write-off)
Slide 38: Strong and established asset franchise
Strong and established asset franchise ❑ Vintage book and tested business model ❑ Unique product proposition with ~ 15 years experience ❑ Growing opportunity in used and new vehicles especially in ❑ Strong collateral understanding core markets ❑ Deep penetration in core markets ❑ Deep penetration in
Slide 39: Asset book snapshot
Asset book snapshot ₹ in Crores Q4’FY23 Q4’FY22 Vintage Assigned/ Gross Assigned/ Gross Segments Gross Gross Gross NPA Gross (year) Securitised Advance Securitised Advance Advances NPA (%) Advances loans Yield (%) loans Yield (%) Wheels 1996 19,023 3,859 14.0% 409 2.2% 16,438 912 14.0% SBL (MSME) 20
Slide 40: Provisioning Summary
Provisioning Summary Net credit loss (NCL) Q4’FY23 Q4’FY22 Q3’FY23 FY23 FY22 ₹ in Crores Repo & POS Loss 26 47 21 106 150 Write off 18 23 26 101 62 Less: Bad Debt Recovery* 6 3 11 23 7 Net Credit Loss 38 67 37 184 205 Net Credit Loss (as % of Avg. Total Assets) 0.18% 0.42% 0.19% 0.23% 0.34% Credit C
Slide 41: Overview of provisions
Overview of provisions ₹ in Crores Mar’23 Dec’22 Particulars No. of Loan No. of Loan Provisions Coverage Provisions Coverage loans Amount loans Amount GNPA 45,904 981 695 71% 45,405 1,019 693 68% Covid related restructuring (Standard) 8,539 700 116 17% 10,472 779 127 16% Contingency provisions 90 98
Slide 42: 5. Tech Update
5. Tech Update 19 Lacs+ digital customers 48% customers acquired via digital products in Q4’FY23 5 Lacs+ live credit cards 10 Lacs+ UPI QR codes installed
Slide 43: Key Strategic Objectives for tech
Key Strategic Objectives for tech Grow retail focused, stable, low-cost deposit franchise Develop unsecured lending capability using Data & Analytics Build digital distribution channels Invest in core technology to remain future ready Drive automation and operating efficiency 43
Slide 44: Digital is accelerating our customer acquisition and increasing engagement
Digital is accelerating our customer acquisition and increasing engagement Accelerated acquisition through digital proposition… …at much lower cost AU 0101 launch 40 100 No. of customers (Lacs) 35 8.7 Lacs 30 25 Acquisition <50 20 15 FY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 20 FY 21 FY 22 FY 23 Branch
Slide 45: AU 0101 – 4x growth since launch
AU 0101 – 4x growth since launch Tech Savvy Monthly Active Customer Base Digital Customers Customers Users Dec‘22 ~35.7 Lacs 21.6 Lacs 16.3 Lacs 9.2 Lacs Mar‘23 ~38.6 Lacs 24.6 Lacs 19.0 Lacs 11.0 Lacs QoQ 8% 14% 17% 20% Consistently improving digital adoption >4x digital customers since AU 0101 lau
Slide 46: Video Banking - helping us achieve meaningful growth
Video Banking - helping us achieve meaningful growth ❑ Continue to develop Video Banking proposition with expanding suite of banking services delivered over secured video calls − Launched digital current account with integrated video KYC – enabling seamless, real time account opening ❑ Launched Bill
Slide 47: Credit Card - continues to scale with strong performance across key metrics
Credit Card - continues to scale with strong performance across key metrics 5 Lacs+ 64% 26% ₹ 1.5 Lacs Cards live Cards issued to NTB 1st time Credit Card users Average limit per card ❑ Monthly issuance of 50,000+ cards in Mar’23 ❑ Achieved ₹ 1,000 Cr+ monthly spends in Mar’23; Spend per card above
Slide 48: UPI QR - deepening our relationship with small merchants
UPI QR - deepening our relationship with small merchants Acquisition 10 Lacs+ 68% ~2.4 Lacs UPI QRs installed till Q4’FY23 Activation rate New customers acquired through UPI QR till Q4’FY23 ~1.7 Cr ~1.9 Lacs ₹ 1,520 Cr Transactions in Q4’FY23; Daily average Value of transactions in transactions in M
Slide 49: 6. Other Key Updates
6. Other Key Updates Received Silver Shield award from ICAI for Excellence in Financial Reporting, 2021-22 Rated ‘AA’ in ESG by MSCI Board Level Sustainability Committee formed in Q4’FY23 Organized Bano Champion State level tournament for 1,600+ for rural children
Slide 50: Sustainability @AU
Sustainability @AU Environment is a recognized stakeholder for AU Good Governance Customer First Community Always Board level Sustainability Stakeholder communication & Released Sustainable committee formed in Customers on-boarded via procurement guidelines Q4’FY23 Video Banking. First sustainabilit
Slide 51: CSR Initiative @ AU
CSR Initiative @ AU COE for Skills Development AU’s Sports Initiative Skill development is a key project of the Bank. In ‘Bano Champion’ is aimed at holistic development of rural & semi- FY23, 7,693 youth have been trained with 80% urban children & is live across 60+ locations with 6,900+ children i
Slide 52: Financial & Digital Inclusion
Financial & Digital Inclusion Universal Access to Financial Services ❑ 30% of our total touchpoints/branches - 311 are in unbanked rural centres (Tier-VI, population less than 5,000 & Tier-V, population less than 10,000) ❑ Present in 52 Special Focus Districts* with 92 touchpoints covering 24 Aspira
Slide 53: Abbreviations
Abbreviations BSBDA Basic Savings Bank Deposit A/C OPEX Operating Expenses CASA Current Account Deposits and Savings Account Deposit P&L Profit & Loss Statement CoF Cost of Fund PAT Profit After Tax CRAR Capital Adequacy Ratio PMJJBY Pradhan Mantri Jeevan Jyoti Bima Yojana DII Domestic Institutional
Slide 54: Definitions
Definitions Core Markets are smaller centres in rural/semi-urban which typically have a local economy built around agriculture and a. Core Markets small businesses, and which have traditionally been our traditional markets for lending. b. Urban Markets Larger centres which have more advanced infrast
Slide 55: Disclaimer
Disclaimer This presentation has been prepared by AU SMALL FINANCE BANK LIMITED (the “Bank”) solely for information purposes, without regard to any specific objectives, financial situations or informational needs of any particular person. All information contained has been prepared solely by the Ban
Slide 56: Thank You
THANK YOU For Investor queries contact (details in QR Code): Prince Tiwari Email: investorrelations@aubank.in
AU Small Finance Bank — Q4 FY23 Earnings Presentation on 6ix