Au Small Finance Bank Limited · NSE:AUBANK
Au Small Finance Bank — Investor Presentation (November 2022)
49 slides from Au Small Finance Bank's investor presentation, Nov 3, 2022
Slide 1: Regulation 30 filing cover letter to stock exchanges
Ref. No.: AUSFB/SEC/2022-23/388 Date: 03rd November, 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 Symbol: AUBANK Scrip
Slide 2: AU Insights
AU INSIGHTS Branch Banking | Treasury DCM & Wholesale Liability 3rd November 2022
Slide 3: In this Presentation
In this 1 BRANCH BANKING Presentation 2 TREASURY, DCM & WHOLESALE LIABILITY Here's what we'll cover: 3 Q&A
Slide 4: Building a robust foundation to execute our strategy
Building a robust foundation to execute our strategy 01 02 03 04 05 06 07 08 09 10 TREASURY, SECURED MERCHANT FINANCIAL & BRANCH HOUSING COMMERCIAL DIGITAL CREDIT DCM & WHEELS BUSINESS SOLUTION DIGITAL BANKING LOANS BANKING BANKING CARD WHOLESALE LOANS GROUP INCLUSION LIABILITY 10 Business Groups (S
Slide 5: Total Deposit Book and Share of Deposit Across Verticals
Total Deposit Book and Share of Deposit Across Verticals 58,335 60,000 33,074 Total Deposit Breakup 40,000 CASA - 42% Retail TD + CASA 73% 19,422 20,000 13,489 21,807 Branch Banking Treasury and Wholesale Video Banking CASA -18% 71.4% 27.3% 1.3% Retail TD + CASA 39% 2,508 1,082 2,867 2,343 0 588 Mar
Slide 6: Branch Banking
Yj AU INSIGHTS. -----------------------------------
Slide 7: Branch Banking: Overview
Branch Banking: Overview Branch Banking Journey Distribution & Sales Strategy Our Customers A Case Study Future Priorities 06
Slide 8: Journey Thus Far
Journey Thus Far AU SMALL FINANCE BANK
Slide 9: Large and Growing Deposit Market
Large and Growing Deposit Market Figures in ₹ Crores CAGR 65% of the total 9% ₹173 Lakh Cr deposits come Sep’22 from 136 cities* ₹107 Lakh Cr Mar’17 Small Finance ₹ 17,049 Cr 48% CAGR ₹ 1,21,055 Cr (Mar '22) Banks 0.2% 0.7% CASA Ratio AU ₹ 58,335 Cr increased from 14% - CAGR 56% (Mar’18 to Sep’22) S
Slide 10: How has the Branch Banking charter evolved in last 5 years?
How has the Branch Banking charter evolved in last 5 years? Structure Deposits Liability Branches 2017 - 18 Consolidated Unit of Liabilities Garner deposits from Government, Mar '18 7,923 7,923 Mar '18 80 212 85 377 Co-operative Banks, Retail Customers etc 2019 - 20 Separate Verticals Established Br
Slide 11: Building a Predictable, Scalable, Sustainable & Replicable Deposit Franchise
Building a Predictable, Scalable, Sustainable & Replicable Deposit Franchise Branch expansion majorly in Urban Markets Expanding Distribution Setting up Dedicated Channels (CA, NR,TASC, ES, KAM) First Principles’ Thinking Raising Low-cost, stable retail deposits Managed by rigorous sales management
Slide 12: Led by Dedicated Leadership Team
Led by Dedicated Leadership Team Group Head Liabilities Head of Sales NBM-Branch Head Branch Banking Management & Head Products Sales Channels* Banking (N,S&E)** Operations Strategy NBM - Current NBM - Enterprise NBM – TASC NBM – NR NBM - Insurance NBM – Cross sell Account salary Other Support Funct
Slide 13: Distribution and Sales Strategy
Distribution and Sales Strategy AU
Slide 14: 980 Touchpoints
Touchpoint Highlights 20 States and 2 UTs 980 Touchpoints 235 Districts 710 Locations 524 ATMs Jammu & Kashmir - 2 Urban Himachal Pradesh - 15 Chandigarh - 3 28% Uttarakhand - 1 Punjab - 52 Haryana - 49 Delhi - 33 Core Assam - 1 72% UP - 18 TOUCHPOINTS BREAK-UP Bihar - 1 Rajasthan - 386 Jharkhand -
Slide 15: Differentiated Approach For Urban and Core Markets
Differentiated Approach For Urban and Core Markets, Branch Expansion Led by Urban Markets Branch Expansion driven by Urban markets Reach through Physical, Density through Digital Urban Core URC Case study – NCR Market 290 163 1 - 2 kms 232 Bank X*: 300-350 branches 4 - 5 kms AU Bank: 44 branches 215
Slide 16: Predictability, Scalability, Sustainability & Replicability in action
Predictability, Scalability, Sustainability & Replicability in action… Deposit Volumes well spread across geographies Increasing acceptability across geographies and markets Urban Core State Deposit Share Rajasthan 40% 60% 31% 23 Branches with 10%+ share of RBI deposit Market share in base* in that
Slide 17: Persona of Frontline Sales Employees – Unlocking their potential
Persona of Frontline Sales Employees – Unlocking their potential Been exposed to frequent Very Emotional Generation Reduced Attention Span Digitally Native and generous recognition “Handle with Care” Capsulized, crisp & clear Instant recognition 25-35 years old messaging Has to be dealt with a lot o
Slide 18: Reimagining Potential of a Customer (RPC)
Reimagining Potential of a Customer (RPC) – Bringing Method to Madness % of sales resources opening (RPC) accounts* RPC rhetoric driving behaviour (Royale SA, Platinum SA, Current Accounts) RPC Currency Menu** JUNE '21 49% SEPT '22 1 Personal Loan 3x RPC Currency 1 Life Insurance 3x RPC Currency 27%
Slide 19: Our Customers
Our Customers
Slide 20: Generational Approach to Customer Service
Generational Approach to Customer Service First Principles ... driven by our ... resulting delightful Approach... core values service experience Every service instance for us is a relationship 97% transactions Extended banking hours transaction, not a terminating transaction digitally Dedicated serv
Slide 21: Why is our Saving Account Customer Banking with Us?
Why is our Saving Account Customer Banking with Us? First-principles solutions | Easy Banking Monthly Interest No Deposit Slip No Home Branch Family Banking programs Royale program for affluent & Platinum program for mass affluent Enhanced Wealth and Protection Best-In-Class Family Banking Programs
Slide 22: Who is our Saving Customer & How Engaged is that Customer?
Who is our Saving Customer & How Engaged is that Customer? Our Typical Customer Profile Self Employed Non-professional Self Employed Professional Salaried (Kirana Store owner, Wholesaler.) (Doctor, CA-Tax consultant, Engineer) Housewife Senior Citizens NRI Deepening Our Customer Engagement* % Transa
Slide 23: Why is our Current Account Customer Banking with Us?
Why is our Current Account Customer Banking with Us? Increasing formalization and digitalization Many Businesses are getting into mainstream banking for the first time Premium Offerings for CA CA Royale or affluent CA Mx and above (CA Premium, CA Vishesh, CA Maximum) for Nascent but developing Trans
Slide 24: Who is our Current Account Customer & how Engaged is that Customer?
Who is our Current Account Customer & how Engaged is that Customer? Our Typical Customer Profile Trader Retailer and Distributors Service Providers Self Employed Professional Deepening Our Customer Engagement* % Transacting customers Avg monthly transaction / transacting customer PPC June 2021 63% J
Slide 25: A Case Study
A Case Study
Slide 26: Building Blocks of Urban Markets: A Case study
Building Blocks of Urban Markets: A Case study Well designed branches that are in NCR Branch Distribution – 44 Branch prominent market High quality team with well-defined growth Path Enabling Environment 2017 | 10 Branches 2019 | 6 Branches 2020 | 6 Branches 2021 | 15 Branches 2022 | 7 Branches 25
Slide 27: Future Priorities
Future Priorities AU SMALL FINANCE BANK
Slide 28: Our Priorities Going Forward
Our Priorities Going Forward Deposits Family Banking Employee Maximize Customer LTV Distribution Maximize Deposits Family Banking Distribution Employee Customer LTV Focus on GIST customers to One stop banking solution Deepening relationship with New Branches expansion in Hiring and training right sc
Slide 29: Treasury, DCM & Wholesale Liability
TREASURY, DCM & WHOLESALE LIABILITY AU INSIGHTS
Slide 30: SBU Contribution to Balance Sheet
SBU Contribution to Balance Sheet Liabilities Assets Investments and Deposits Borrowing Advances Branch Banking Wholesale Deposit Borrowing Investments Advances (~65%) (~25%) (~10%) (~28%) (~72%) ~₹42,000 Cr ~₹16,000 Cr ~₹7,000 Cr ~₹20,000 Cr ~₹52,000 Cr Treasury, DCM & Wholesale Liability SBU SBU c
Slide 31: Team Structure and Strength
Team Structure and Strength Wholesale Liability Group Investment Management Group Government Cooperative Bank Wholesale Treasury DCM Business & FIG Deposit Deposits Term Deposits NBFC Segment Liquidity Management Non SLR Investment Management Banking solutions Bank Line Corporate Segment Fund Planni
Slide 32: Wholesale Liability
Wholesale Liability On Balance Sheet Deposit Wholesale Liability Borrowing ~ ₹16,000 Cr ~ ₹24,000 Cr ~ ₹7,000 Cr Government Refinance (65%) Business (44%) Co-operative Bank and Money Market Borrowing FIG (34%) (20%) NBFC (11%) Tier II Bonds (15%) Off Balance Sheet Wholesale Deposit (7%) Borrowing Ce
Slide 33: Government Business: Journey
Government Business: Journey 10 2 92 821 Total Dep - ₹6,989 Cr DEC '21 CASA - 57% Focus on core Banking Solutions – Total Dep - ₹5,258 Cr BBPS/CMS/PG/POS/PFMS/ MAR '20 CASA - 56 % SNA/ CNA Dividend Disbursement 1st Bank in the country to Mandates implement SNA through Total Dep - ₹1,488 Cr IFMS mode
Slide 34: Government Business: Solution Oriented Approach
Government Business: Solution Oriented Approach Shifted from TD / Rate based business to solution-oriented approach 33
Slide 35: Government Business: Capacity Building
Government Business: Capacity Building PFMS Training E-Governance / Digital Solutions Solution-oriented approach to cater govt. dept. PFMS training for Govt. officials Dedicated team for Govt. Business Solutions Handholding Govt. officials in terms of transaction processing and recon Doorstep Bankin
Slide 36: Government Business: Solutions
Government Business: Solutions Beneficiary Loan/Skill Enquiry E-commerce Portal powered by AU Bank Udaipur Smart City App NATIONAL SKILL DEVELOPMENT BHARAT SHILP BAZAAR 35
Slide 37: Wholesale Liability: Deposits
Wholesale Liability : Deposits Amt in ₹ cr Particulars Mar - 2020 Sept - 2022 Co-operative Bank + Financial Institutions Group ~6,900 ~5,500 Wholesale Deposit Team ~500 ~1,100 NBFC Team ~2,000 ~1,700 Certificate of Deposits ~2,200 ~600 Total ~11,600 ~9,000 Deposit by wholesale teams % of total Depos
Slide 38: Wholesale Liability: Borrowings
Wholesale Liability : Borrowings Working with Treasury to have optimal liability mix which is long-term and ALM positive Amt in ₹ Cr Particulars Mar - 2020 Sept - 2022 Refinance (NABARD, NHB, SIDBI, MUDRA) ~6,700 ~4,400 Other Borrowings ~2,000 ~1,300 NCD/Tier II Bonds ~700 ~1,000 Borrowing from Fore
Slide 39: Investments, Regulatory Compliance and Fund Management
Investments, Regulatory Compliance and Fund Management Treasury playing a pivotal role in Regulatory Functions, Fund Raising and Investments ( Total Investment Book ~ ₹ 20,000 Cr ) Treasury ( ~₹15,000 Cr) DCM (~₹5,000 Cr) Liquidity Management Investment Management Balance Sheet Management Investment
Slide 40: Treasury: Improving Funding Profile with low cost
Treasury: Improving Funding Profile with low cost 65,031 Deposit Borrowing Cost of Funds 10% 58,575 8.4% 10% 7.9% 7.7% 6.8% 43,009 5.9% 16% ₹ in Crs 5.8% 36,499 28,036 28% 31% 15,562 49% 51% 69% 72% 84% 90% 90% 2018 2019 2020 2021 2022 Sep'22 Since bank inception, Reduced COF by 380 bps with active
Slide 41: Deposit Granularisation
Deposit Granularisation 7,923 19,422 26,164 35,979 52,585 58,335 100% 59% 63% 56% 44% 33% 27% 75% ₹ in Crs 31% 30% 50% 33% 14% 19% 30% 25% 27% 18% 14% 23% 37% 42% 0% 2018 2019 2020 2021 2022 Sep '22 CASA RTD BTD Total Deposits Continued focus on building granular retail deposits base & CASA. RTD + C
Slide 42: Investments, Regulatory Compliance and Fund Management
Investments, Regulatory Compliance and Fund Management Treasury playing a pivotal role in Regulatory Functions, Fund Raising and Investments ( Total Investment Book ~ ₹ 20,000 Cr ) Treasury ( ~₹15,000 Cr) DCM (~₹5,000 Cr) Liquidity Management Investment Management Balance Sheet Management Investment
Slide 43: DCM | NSLR Investment
DCM | NSLR Investment Liquidity is managed through SLR & NSLR Investments. NSLR Investment ~28% of total investments External shocks witnessed in last 5 years necessitated additional liquidity maintenance being an SFB (NBFC Crisis, Private Bank Crisis, Co-operative bank Crisis, Covid-19 etc) NSLR In
Slide 44: DCM | NSLR Investment
DCM | NSLR Investment Asset Quality NSLR Mix 100 15% 14% 8% 16% 18% 15% 22% Declining Interest Rising Interest 75 Rate Rate 100 50 18% 29% 90% 83% 57% 43% 36% 75% 85% 84% 89% 84% 82% 85% 75 25 0 50 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 30-Jun-22 30-Sep-22 High quality liquid investment ~
Slide 45: Summary
Summary Liquidity Management Aided by capital raise of ₹2,500 Cr (Tier I and Tier II), the bank continues to maintain excess liquidity over and above regulatory LCR and additional liquidity in the form of non-SLR investments Additionally, the Bank has access to a well-diversified resource mix (Refin
Slide 46: Summary
Summary Cost of funds Deposit rates are likely to go up higher with the rise in Repo rate, tighter liquidity and Competition; Treasury will endeavour to manage COF by optimising the mix of deposits, low- cost refinance and securitisation The focus will be on passing any incremental cost to customers
Slide 47: Abbreviations
> Abbreviations Asset Liability Management Bharat Bill Payment System Business Correspondence Banking Outlet Basic Savings Bank Deposit A/c Credit Deposit Ratio Certificate of Deposit Cash Management Solutions Central Nodal Account Debt Capital Market Drop Line OD Financial Institution Group Funds T
Slide 48: 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 49: Thank You!
BADLAAV HUMSE HAI For Investor queries contact (details in QR Code): Prince Tiwari | Aseem Pant Thank You! Email: investorrelations@aubank.in
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