Au Small Finance Bank Limited · NSE:AUBANK
Au Small Finance Bank — Q1 FY23 Earnings Presentation
50 slides from Au Small Finance Bank's earnings presentation, Jul 20, 2022
Slide 1: Exchange filing cover letter
AU SMALL FINANCE • BANK Ref. No.: AUSFB/SEC/2022-23/176 Date: 20th July, 2022 To, National Stock Exchange of India Ltd. BSE Limited Exchange Plaza, C-1, Block G, Phiroze Jeejeebhoy Towers, Bandra Kurla Complex, Dalal Street, Bandra (East), Mumbai 400051, Mumbai 400001, Maharashtra. Maharashtra. NSE
Slide 2: Investor Presentation Q4'FY22
Investor Presentation Q4’FY22
Slide 3: Agenda
Management Update Assets Update Operating & Financial Highlights Tech Update Liabilities Update Other Key Updates
Slide 4: Key Messages
❑ Sustainable Business model – Core and Urban approach, granular deposits (CASA+ Retail TD @ 70%), 94% Secured & 90% Retail lending, identified Leadership and profitability at SBUs, established asset products tested through the cycles, Investing in future businesses – Digital accounting for 40%+ inc
Slide 5: Q1'FY23 Financial performance snapshot
Q1’FY23 Financial performance snapshot ❑ Granularity of deposits continued to improve driven by segmental focus, increasing brand awareness, ₹ 54,631 Cr branch expansion and improved digital offerings Deposits +48% YoY o Average LCR of ~129% in Q1 allowed the Bank to focus on calibrated deposit grow
Slide 6: Other Key Highlights
Other Key Highlights ❑ CRISIL ratings upgraded the long-term debt rating of the Bank to “CRISIL AA/Stable” from “CRISIL AA-/Positive” while upgrading the fixed deposit programme to “CRISIL AA+/Stable” and reaffirming short-term rating at “CRISIL A1+” ❑ Added 3.2 Lac customers in Q1 of which 43% are
Slide 7: We continue to see strong traction for our digital initiatives
We continue to see strong traction for our digital initiatives Adoption 11.9 Lacs 6.7 Lacs Digital customers AU 0101 Monthly Active Users 13% Q-o-Q 14% Q-o-Q Acquisition 55k+ 80k+ 1.7 Lacs+ ₹ 122 Cr. Credit Cards issued (Q1FY23) Savings accounts opened through AU 0101 UPI QRs installed Digital perso
Slide 8: Digital is accelerating our customer acquisition and increasing engagement
Digital is accelerating our customer acquisition and increasing engagement Accelerated customer acquisition Increased customer engagement Launch of AU 0101 Mar‘21 Mar‘22 Jun‘22 Count of customers (in Lacs) 30 Digital Monthly transacting SA 5.3 7.8 8.9 25 customers (lacs) 20 Transacting customers as
Slide 9: Touchpoint Highlights
Touchpoint Highlights 20 States and 2 UTs 953 (+34) Touchpoints 232 Districts 707 Locations 542 ATMs Touchpoints Break-up J&K 3 HP 15 26% Punjab 52 (+2) Chandigarh 1 Uttarakhand 1 Haryana 47 (+2) 74% Delhi 32 (+3) UP 13 Assam 1 (+1) Rajasthan Urban Core 369 (+10) Bihar 1 Gujarat Jharkhand 1 (+1) AU
Slide 10: Garnering deposits from Urban markets and disbursing in Core markets
Garnering deposits from Urban markets and disbursing in Core markets Liabilities Break up Assets Break up 23% (26%) 35% Urban Core (35%) 65% 77% (65%) (74%) 1% 1% 2% 1% 1% 0% 2% 1% 3% Rajasthan 3% Maharashtra 5% Delhi NCR 30% 17% 7% Punjab Haryana 40% 7% Gujarat Madhya Pradesh 10% Himachal Pradesh 9
Slide 11: 2. Operating & Financial Highlights
2. Operating & Financial Highlights Incremental spreads remain resilient sequentially highlighting our unique positioning Stable asset quality with net NPA at 0.56% Maintaining sufficient provisioning with 72% PCR ROA of 1.5% and ROE of 14% for Q1’FY23
Slide 12: Q1'FY23 Financial highlights
Q1’FY23 Financial highlights Net Interest Income Total Income PAT (₹ Crore) 26% 32% 35% 976 1,979 268 1,568 203 724 Q1'FY22 Q1'FY23 Q1'FY22 Q1'FY23 Q1'FY22 Q1'FY23 Yield on AUM Cost of Funds Net Interest Margin ROA ROE Vs. Vs. Vs. Vs. Vs. 14.0% 6.3% 6.0% 1.6% 12.7% (Q1’FY22) (Q1’FY22) (Q1’FY22) (Q1’
Slide 13: Quarterly trends of key parameters
Quarterly trends of key parameters Customers Employees Shareholders’ Fund Total B/S Assets 52% YoY (in 000s) (₹ Crore) (₹ Crore) 38% YoY (in lacs) 27% YoY 20% YoY 30.7 69,078 71,041 27.5 29.9 7,789 7,514 23.7 27.8 7,127 58,645 25.5 6,781 21.3 6,490 20.2 23.5 23.4 51,357 53,236 Q1'FY23 Q1'FY22 Q3'FY2
Slide 14: Quarterly trends of key parameters
Quarterly trends of key parameters Net Interest income Total Income PAT ₹ Crore 35% YoY 26% YoY 32% YoY 937 976 1,978 1,979 346 820 302 753 1,772 279 724 268 1,568 1,597 203 Q1'FY23 Q1'FY22 Q1'FY22 Q1'FY23 Q3'FY22 Q3'FY22 Q2'FY22 Q4'FY22 Q2'FY22 Q4'FY22 Q1'FY23 Q1'FY22 Q3'FY22 Q2'FY22 Q4'FY22 Net In
Slide 15: Stable spreads
Stable spreads Incremental Spreads AUM Spreads 14.0% 13.8% 13.7% 13.4% 13.3% 12.9% 12.7% 12.7% 11.7% 12.1% 7.6% 7.7% 7.8% 7.8% 7.7% 7.5% 7.4% 6.8% 6.9% 6.3% 6.3% 6.1% 5.7% 5.9% 5.7% 5.7% 5.4% 5.3% 5.3% 5.3% Q1'FY22 Q2'FY22 Q3'FY22 Q4'FY22 Q1'FY23 Q1'FY22 Q2'FY22 Q3'FY22 Q4'FY22 Q1'FY23 Disbursement
Slide 16: Profit & Loss statement
Profit & Loss statement (All Figures in ₹ Crore) Q1'FY23 Q1'FY22 Y-o-Y Q4'FY22 Q-o-Q ❑ NII growth at 35% YoY for Q1’FY23 aided by broadly stable spreads and AUM growth of 37% YoY Income Interest Earned 1,820 1,353 34% 1,667 9% ❑ Other income was subdued due to MTM and realized losses Interest Expend
Slide 17: Balance sheet
Balance sheet (All Figures in ₹ Crore) 30-Jun-22 30-Jun-21 Y-o-Y 31-Mar-22 Q-o-Q Liabilities Shareholders’ Funds 7,789 6,490 20% 7,514 4% ❑ Balance sheet grew by 38% YoY and 3% QoQ Deposits 54,631 37,014 48% 52,585 4% ❑ Deposits at 90% of external funding Borrowings 6,113 6,101 0% 5,991 2% (borrowin
Slide 18: Other income
Other income (All Figures in ₹ Crore) Q1'FY23 Q1'FY22 Y-o-Y Q4'FY22 Q-o-Q Loan Assets Processing & Other Fees 134 28 375% 164 -18% General Banking, Cross Sell & Deposits related fees 52 32 64% 58 -10% PSLC Fees 13 18 -29% 80 -84% Miscellaneous 16 5 212% 13 17% Core Other Income 214 83 159% 315 -32%
Slide 19: Closer look at our Cost/Income
Closer look at our Cost/Income Below, we provide few additional disclosures* and details regarding our operating expense (for FY22) to give a broad sense of our C/I drivers Business Segment Vintage Cost/Income – FY22** Retail Assets - overall 40-45% Wheels (Incl. TW) Over 15 years ~45-50% SBL Over 1
Slide 20: Profitability trends
Profitability trends ROA (%) ROE (%) 1.6% 1.5% 14.0% 12.7% Q1'FY22 Q1'FY23 Q1'FY22 Q1'FY23 ROA Components NII (%) Other Income(%) 1.4% 1.2% 0.9% 5.6% 5.6% 0.6% Other Income Core Other Income** Q1'FY22 Q1'FY23 Q1'FY22 Q1'FY23 Opex (%) Cost to Income Ratio (%) Provision & Contingencies (%) 65% 62% 57%
Slide 21: 3. Liabilities Update
3. Liabilities Update Deposits up 48% YoY to ₹ 54,631 Cr. Retail deposits mix at 70% vs 66% QoQ CASA ratio at 39% vs 37% QoQ 34 new touchpoints added in Q1’FY23
Slide 22: Scale low cost, retail-focussed sustainable liability franchise
Scale low cost, retail-focussed sustainable liability franchise Key turning points Core Principles of our Deposit Strategy Deposit as a % Retail Deposits of external as a % of total Communication & Engagement liabilities deposits Automated Customer Life Cycle Mgmt. Virtual RMs, Newsletters Apr’17 N/
Slide 23: How has the Branch Banking charter evolved in last 5 years?
How has the Branch Banking charter evolved in last 5 years? Structure Products Deposits Branches Consolidated Unit of Mar'17 80 210 16 Fundamental Products Mar'18 6,686 2017 Liabilities CA, SA, TD Garner deposits with customer mix ranging from Lockers Government, Co-operative Insurance Mar'18 80 210
Slide 24: What's driving the Branch banking franchise?
What’s driving the Branch banking franchise? Expanding Distribution …with Focus on raising High … enabled by a Comprehensive Product Quality, Low-cost, stable retail suite deposits Best-in-class Family Banking Program Branches Expansion in Urban/Metro markets SA • Affluent (Royale) • Royale (Affluen
Slide 25: Deposits - Snapshot
Deposits - Snapshot Focus on granular deposits and customer profiles (₹ Crore) 51% 5% 5% 5% 5% 5% TASC 6% 6% 12% 12% 10% 2,211 2,569 14% 13% 11% 12% 13% 1,784 Govt 15% 12% 1,600 17,039 19,006 18% 13% 14% 1,387 15,595 Banks 8,102 10,228 31,470 32,191 Corporates 60% 59% 63% 25,861 26,123 26,566 57% 57
Slide 26: 4. Asset Business Update
4. Asset Business Update Strong and Sustainable Business model GNPA stable at 1.96% vs 1.98% QoQ Collection Efficiency for Q1’FY23 at 105% PCR coverage at 72%
Slide 27: Strong and established Assets franchise
Strong and established Assets franchise ▪ Vintage book and tested business model ▪ Unique product proposition with over 10 years experience ▪ Growing opportunity in used and new especially in core ▪ Limited competition markets ▪ Deep penetration in core markets ▪ Deep penetration in core markets; ▪
Slide 28: Assets snapshot
Assets snapshot Gross Gross Disbursements All figures in ₹ Cr Vintage AUM AUM Yield Advances NPA Q1'FY23 Wheels 1996 18,614 13.8% 17,946 422 3,351 ❑ GNPA decreased slightly to 1.96% versus 1.98% QoQ SBL-MSME 2007 16,912 15.0% 16,732 448 1,281 ❑ Standard Restructured accounts stood at 2.1% of Home Lo
Slide 29: Provisioning snapshot
Provisioning snapshot Credit Cost - Net Impact on P&L Q1’FY23 Q4’FY22 Q1’FY22 (All Figures in ₹ Crore) Repossession Loss 20 36 6 POS Loss 9 11 4 Write off 34 23 - Less: Bad Debt Recovery* -2 -3 -1 Net Credit Loss (A) 61 9 67 Net Credit Loss (as % of Avg. Total Assets) 0.3% 0.4% 0.1% Provision on NPA
Slide 30: Overview of provisions
Overview of provisions Jun’22 Mar’22 Particulars Loan No. Provisions* Coverage No. Loans* Provisions* Coverage Amount* GNPA 44,419 970 654 67%** 43,452 924 653 71%** Covid related restructuring (Standard) 16,561 1,044 170 16% 18,968 1,180 192 16% Contingency provisions 144 157 Floating provisions 41
Slide 31: 5. Tech Update
5. Tech Update Launched LiT credit card - India’s first customizable credit card 43% Customers acquired via digital products/ channels in Q1’FY23 11.9 Lacs digital customers 14% increase in MAU Q-o-Q
Slide 32: 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 31
Slide 33: Building best in-class digital proposition to drive our deposit franchise
Building best in-class digital proposition to drive our deposit franchise Building Amazing Products Making it Easy Personalization ▪ Launched new products: ▪ Launched new features to enhance ▪ Expanded pre-approved offers − LiT – India’s first customizable credit customer servicing: program to: card
Slide 34: AU 0101 – Strong adoption since launch
AU 0101 – Strong adoption since launch Customer Base Tech Savvy Customers Digital Customers Monthly Active Users Mar ‘22 ~27.5 Lacs 16.0 Lacs 10.5 Lacs 5.9 Lacs Jun ‘22 ~30.7 Lacs 18.0 Lacs 11.9 Lacs 6.7 Lacs Q-o-Q 11% 12% 13% 14% 164% increase in digital customers in 191% increase in Monthly Active
Slide 35: 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 (acquisition, servicing and relationship management) Full KYC (Video KYC) SA as proportion of total SA at bank* 41% 37% 80%
Slide 36: Credit Card - Continues to scale with strong performance
Credit Card - Continues to scale with strong performance across key metrics 2.4 Lacs+ 6:4 42% ₹ 1.15 Lacs Cards issued; Monthly run Existing to new customers 1st time Credit Card users Average limit per card rate of ~30,000 cards 39% ❑ Purchase active customers showing healthy trend, better than ind
Slide 37: LiT credit card - At the forefront of innovation and customer centricity
LiT credit card - At the forefront of innovation and customer centricity ❑ India’s first customizable credit card – giving customers the freedom to build their card the way they like ❑ Power to choose card features and pricing now at customers’ fingertips Build your own card Pay only for what you ch
Slide 38: UPI QR - Helping us deepen our relationship with small merchants
UPI QR - Helping us deepen our relationship with small merchants Acquisition 6.6 Lacs+ 67% 1.7 Lacs+ UPI QRs installed till Q1 Activation rate New customers acquired through UPI QR till Q1 1.1 Cr. 1.25 Lacs ₹ 937 Cr. Transactions in Q1’FY23 Daily average Value of transactions in Q1 transactions in J
Slide 39: Building our core tech capabilities and driving automation
Building our core tech capabilities and driving automation • Infra modernization: − Tech upgrade to remain future ready (CBS, Data platform) − Capacity upgrade to sustain increased volume (Enterprise storage) UPI transactions volume (lacs) • BAU enhancements: Tech Infra 265 − Reduced month end batch
Slide 40: 6. Other Key Updates
6. Other Key Updates Sustainability is intrinsic to our business model Increased focus of Sustainability Reporting Onboarded Head of Sustainability Strong and Independent Board
Slide 41: Sustainability @ AU
Sustainability @ AU Environment Social Governance Recognize Environment as a key Addressing the Occupational, Good governance is the cornerstone to stakeholder Residential, and Social vulnerabilities building trust ▪ Bank and AU Foundation supported “Save ▪ Launched Employee Wellbeing Program with ▪
Slide 42: Financial & Digital Inclusion
Financial & Digital Inclusion Universal Access to Financial Services ➢ 31% of our total touchpoints/branches - 290 are in unbanked rural centres (Tier-VI, population less than 5,000 & Tier-V, population less than 10,000) ➢ Present in 50 Special Focus Districts with 85 touchpoints covering 24 Aspirat
Slide 43: Recognitions for AU Bank
Recognitions for AU Bank Best Small Finance Bank at MSME Golden peacock Banking Excellence Award Awards 2021 for CSR by CIMSME Won 2 Awards ‘Technology Innovator Of 1.Excellence in The Year' Award Employee at 3rd Annual Engagement BFSI Technology Excellence 2.Best Fintech Awards 2022 partnership 42
Slide 44: Recognitions for AU Bank
Recognitions for AU Bank 3 Awards from PFRDA APY Annual Award Recognised as Game Changers Leadership Capital 4.0 Award 43
Slide 45: Shareholding Pattern as on 30th June'22
Shareholding Pattern as on 30th June’22 Corporate Bodies Retail Promoter & Promoter Group Financial Institution 1.0% 2.4% 11.6% Insurance Companies 3.6% 28.2% AIF 4.0% 11.0% Mutual Funds 38.2% Foreign Institutional Investors 44
Slide 46: Experienced Board of Directors
Experienced 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 Leadership positions at IMGC, CERSAI, PFRDA, etc. Independent Directors Executive Directors Mr. H R Khan Ms. Jyoti Narang Mr. Sanjay
Slide 47: Abbreviations
Abbreviations AUM Asset Under Management NTC New to Credit BSBDA Basic Savings Bank Deposit A/C OPEX Operating Expenses CASA Current Account Deposits and Savings Account Deposit P&L Profit & Loss Statement CRAR Capital Adequacy Ratio PAT Profit After Tax DPD Days Past Due PMJJBY Pradhan Mantri Jeeva
Slide 48: 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 49: 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 50: Thank You
THANK YOU For Investor queries contact (details in QR Code): Prince Tiwari | Aseem Pant Email: investorrelations@aubank.in
AU Small Finance Bank — Q1 FY23 Earnings Presentation on 6ix