Au Small Finance Bank Limited · NSE:AUBANK
Au Small Finance Bank — Q4 FY2022 Earnings Presentation
59 slides from Au Small Finance Bank's earnings presentation, 2022
Slide 1: Investor Presentation Q4'FY22
Investor Presentation Q4’FY22
Slide 2: 5 Years of Building a Customer Centric Banking Franchise
Cedebrating YEARS OF BANKING 5 Years of Building a Customer Centric Banking Franchise! In a span of 5 years, we have made significant strides in our journey towards becoming a tech-led & retail-focused Bank providing a simpler and rewarding banking experience to our customers. Our presence in unders
Slide 3: Learnings & strategy in our 5-year journey of building trust
Learnings & strategy in our 5-year journey of building trust Madness Madness to Method to Method Borrower Borrower to Customer to Customer KYC to UYC Quantity to Quality Unified Market to Differentiated approach for Core and Urban Transactional approach to Generational orientation Consistently chall
Slide 4: 5 years of Banking operations amidst an exceptionally challenging environment
5 years of Banking operations amidst an exceptionally challenging environment.. Particulars 31-Mar-2017 31-Mar-2022 Growth Events we faced in the past 5 years Touchpoints 301 919 3.1 x Employees 8,515 27,817 3.4 x • 2016 - Demonetisation Unique Customers 2,66,220 27,50,863 10.3 x • 2017 - GST Implem
Slide 5: Steady scale up in granular liabilities and reduction in cost of funds
…..with steady scale up in granular liabilities and reduction in cost of funds… 53 90% 84% 69% 72% 36 51% 26 19 8 10% 1 Jun'17 Mar'18 Mar'19 Mar'20 Mar'21 Mar'22 Jun'17 Mar'18 Mar'19 Mar'20 Mar'21 Mar'22 Deposits ('000 Cr) Deposits as % of External Borrowings 66% 8.4% 7.9% 7.7% 55% 6.8% 44% 5.9% 40%
Slide 6: Stable approach and resilient asset quality in an unprecedented environment
..and a stable approach and resilient asset quality in an unprecedented environment.. 89% 88% Core asset principles ✓ Small Ticket size Stable approach in assets ✓ Secured, Risk-based pricing based on first principles ✓ Mainly for income generation purpose ✓ Customer Service has been our forte Mar'1
Slide 7: Consistently strengthening the Board and employee base
Consistently strengthening the Board and employee base 31-Mar’17 As on date Broadening and Total number of Directors 5 10 Strengthening our Board Total Independent Directors 3 8 30,000 27,817 25,000 20,000 7+ years Building a strong and 15,000 Average vintage of empowered team 10,000 8,515 Senior ma
Slide 8: Building a future ready Bank
Building a future ready Bank Tech remains an area of top focus for us and we are executing on a clearly defined Digital Bank for Retail Video Banking set of priorities 41% of SA accounts Credit Cards UPI QR Customers 1.7 Lacs+ MAU 5.9 Lac opened through VB in 4.8 Lacs+ Q4’FY22 2x* increase in total
Slide 9: Our purpose: Empowering India
Our purpose : Empowering India 9
Slide 10: Building a SBU structure to build a stronger foundation to execute our strategy
Building a SBU structure to build a stronger foundation to execute our strategy ▪ 10 Business Groups (SBU structures) formalized to drive future growth ▪ Each BU to have ✓ Its own vertical structure supported by shared horizontals like HR, Finance, MIS etc. ✓ Its own growth strategy and approach to
Slide 11: Management Update, Operating & Financial Highlights, Branch Banking, Asset Quality, Tech, Other Updates
Management Update Asset Quality Operating & Financial Highlights Tech Update Branch Banking Update Other Key Updates
Slide 12: 1. Management Update
1. Management Update Completed 5 years of operations as a Small Finance Bank Board recommends bonus share issuance in 1:1 ratio and dividend of ₹ 1 per share (pre-bonus issue) CARE upgraded long-term credit rating to AA/Stable from AA-/Stable Provisioning policy strengthened further resulting in PCR
Slide 13: Executive summary
Executive summary OPERATING ENVIRONMENT ▪ Q4’FY22 saw sustained improvement in demand and asset quality across business segments driven by continued customer cashflows including pickup in activity particularly in more pandemic-impacted segments such as schools and hospitality ▪ Inflationary pressure
Slide 14: Executive summary
Executive summary LIABILITIES ▪ Deposits crossed ₹ 50,000 Cr and stood at ₹ 52,585 Cr as on 31-Mar’22 up 46% YoY and 19% QoQ ▪ CASA deposits grew by 137% YoY and 13% QoQ; CASA ratio stood at 37% as on 31-Mar’22 (23% on 31-Mar’21) ▪ Cost of Funds for Q4’FY22 declined by 20 bp QoQ to 5.7%; Incremental
Slide 15: We continue to see strong traction for our digital initiatives
We continue to see strong traction for our digital initiatives 10.5 Lacs 5.9 Lacs Adoption Digital customers AU 0101 Monthly Active Users 35% Q-o-Q 34% Q-o-Q Acquisition 1.4 Lac+ 1.7 Lac+ 4.8 Lacs+ ₹ 265 Cr. Savings accounts opened Credit cards issued UPI QRs installed Digital personal Loan through
Slide 16: Digital is accelerating our customer acquisition
Digital is accelerating our customer acquisition Accelerated customer acquisitions post launch New customers acquired through digital Count of customers (in Lacs) of digital products/channels1 products/channels in Q4 FY22 30 Digital 25 Savings Accounts 20 34% 45% Credit Cards UPI QR 15 FY 20 Q1 Q2 Q
Slide 17: Touchpoint Highlights
Touchpoint Highlights Jammu & Kashmir Himachal Pradesh Chandigarh Uttarakhand Punjab Haryana Delhi UP Bihar Rajasthan MP Chhattisgarh West Bengal Gujarat Maharashtra Odisha Telangana Goa Karnataka Tamil Nadu 17
Slide 18: Contiguous & growing distribution franchise
Contiguous & growing distribution franchise 18 States and 2 UTs 919 Touchpoints 230 Districts 703 Locations 514 ATMs Break up of Touchpoints Added during Sr. No. States & UTs 31-Dec-21 31-Mar-22 Q4’FY22 1 Rajasthan 348 11 359 2 Gujarat 131 7 138 3 Madhya Pradesh 117 8 125 4 Maharashtra 87 5 92 5 Pun
Slide 19: 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%) 36% (34%) Urban Core 64% 77% (66%) (74%) 1% 1% 2% 2% 2% 1% 1% Rajasthan 4% Maharashtra 4% Delhi NCR 17% 30% Punjab 6% Haryana 41% Gujarat 7% 10% Madhya Pradesh Himachal Pradesh 9% 5% U
Slide 20: Reputed recognitions for the Bank
Reputed recognitions for the Bank Best Small Finance Bank in FE Best Banks Awards 2020-21 Listed in ET Best BFSI Brands 2022 by Economic Times India’s Best Small Finance Bank in the annual Business Today-KPMG Survey of India’s Finest Banks and Fintechs 20
Slide 21: 2. Operating & Financial Highlights
2. Operating & Financial Highlights Disbursements up 44% YoY in FY22 CoF declined 88bp to 5.9% in FY22; NIM at 5.7% PCR of 75% and Net NPA at 0.5% ROA of 1.9% and ROE of 16.4% for FY22
Slide 22: FY22 highlights
FY22 highlights ▪ Granularity of deposits continued to improve driven by increasing brand awareness, ₹ 52,585 Cr branch expansion and improved digital offerings Deposits +46% YoY o Improved CASA ratio to 37% from 23% YoY ₹ 25,407 Cr Disbursements +44% YoY o Cost of funds in FY22 reduced by 88 bps Yo
Slide 23: FY22 financial highlights
FY22 financial highlights Net Interest Income Total Income PAT ₹ Crore 21% 37% 88% 6,915 1,130 3,234 5,720 2,365 600 FY21 FY22 FY21 FY22 FY21 FY22 Yield on AUM Cost of Funds Net Interest Margin ROA ROE Vs. Vs. Vs. Vs. Vs. 14.4% 6.8% 5.3% 1.3% 12.0% (31-Mar-21) (31-Mar-21) (31-Mar-21) (31-Mar-21) (31
Slide 24: Q4'FY22 key financial highlights
Q4’FY22 key financial highlights Customers Employees Shareholders’ Fund 24% YoY ₹ Crore (in lacs) 36% YoY 20% YoY 27.5 27,817 7,514 23.7 25,502 7,127 22,484 23,486 23,435 6,781 21.3 6,490 20.2 20.2 6,275 Q3'FY22 Q1'FY22 Q4'FY21 Q2'FY22 Q4'FY22 Q3'FY22 Q1'FY22 Q4'FY21 Q2'FY22 Q4'FY22 Q1'FY22 Q3'FY22
Slide 25: Q4'FY22 key financial highlights
Q4’FY22 key financial highlights Total Income Net Interest income PAT ₹ Crore 28% YoY 43% YoY 1,978 937 105% YoY 346 1,772 820 1,540 1,568 1,596 753 302 724 279 656 203 169 Q1'FY22 Q3'FY22 Q2'FY22 Q4'FY22 Q4'FY21 Q1'FY22 Q3'FY22 Q2'FY22 Q4'FY22 Q4'FY21 Q1'FY22 Q3'FY22 Q4'FY21 Q2'FY22 Q4'FY22 Net Int
Slide 26: Stable spreads
Stable spreads Incremental Spreads AUM Spreads 16.0% 16.0% 14.2% 14.0% 13.8% 13.7% 13.8% 13.4% 14.0% 12.9% 12.7% 14.0% 11.7% 12.1% 12.0% 12.0% 10.0% 10.0% 7.9% 7.6% 7.7% 7.7% 7.7% 7.8% 7.7% 7.4% 8.0% 6.8% 8.0% 6.3% 6.0% 6.0% 6.5% 6.3% 6.1% 5.9% 5.4% 5.9% 5.7% 4.0% 5.3% 5.3% 5.3% 4.0% 2.0% 2.0% 0.0%
Slide 27: Profit & Loss statement
Profit & Loss statement (All Figures in ₹ Crore) FY22 FY21 Y-o-Y Q4FY'22 Q4FY'21 Y-o-Y Q3FY'22 Q-o-Q ▪ NII growth at 37% YoY for FY22 aided by Income reduction in CoF by ~88bps YoY and AUM Interest Earned 5,922 4,950 20% 1,667 1,292 29% 1,496 11% growth of 27% YoY Interest Expended 2,688 2,585 4% 73
Slide 28: Balance sheet
Balance sheet (All Figures in ₹ Crore) 31-Mar-22 31-Mar-21 Y-o-Y 31-Dec-21 Q-o-Q Liabilities Shareholders Fund 7,514 6,275 20% 7,127 5% ▪ Balance sheet grew by 34% YoY and 18% QoQ Deposits 52,585 35,979 46% 44,278 19% Borrowings 5,991 7,030 -15% 4,569 31% ▪ Deposits at 90% of external funding Other
Slide 29: Other income
Other income (All Figures in ₹ Crore) FY22 FY21 Y-o-Y Q4FY'22 Q4FY'21 Y-o-Y Q3FY'22 Q-o-Q Loan Assets Processing & Other Fees 428 305 40% 164 131 25% 141 16% General Banking, Cross Sell & Deposits 165 118 41% 58 43 33% 40 44% related fees PSLC Fees 225 129 74% 80 104 -23% 77 4% Miscellaneous 32 15 1
Slide 30: Operating expense movement
Operating expense movement ₹ Crore 2,540.0 # of Employees Balance sheet +24% YoY growth +34% YoY 257 New Business 2,040.0 246 initiatives - Cards, QR, 145 18% 106 VB 1,540.0 33% 2,413 Distribution expansion 1,040.0 1,658 540.0 Business as usual (BAU) expenses Brand building 40.0 Opex - FY'21 Structu
Slide 31: Profitability trends
Profitability trends ROA (%) ROE (%) 1.9% 16.4% 1.3% 12.0% FY21 FY22 FY21 FY22 ROA Components NII (%) Other Income(%) 1.7% 1.6% 5.4% 5.0% FY21 FY22 FY21 FY22 Opex (%) Cost to Income Ratio (%) Provision & Contingencies (%) 0.3% Covid -19 4.0% 52.4% 57.1% 3.5% 1.2% 0.6% Other provisions FY21 FY22 FY21
Slide 32: 3. Branch Banking Update
3. Branch Banking Update Deposits up 46% YoY to ₹ 52,585 Cr. Retail deposits mix at 66% CASA ratio at 37% 33 New liability Branches added in Q4’FY22
Slide 33: 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 (B
Slide 34: Branch banking - Snapshot
Branch banking - Snapshot Total Deposit and CASA trends Branch banking deposits Average monthly balance ₹60,000 Crore 50% 49,466 52,585 42,049 45% 2,569 37,164 50,000 44,278 35,016 1,679 39,034 40% 1,784 33,628 1,406 40,000 35,979 37,014 39% 35% 1,600 17,039 1,268 16,318 37% 1,632 1,387 1,164 1,150
Slide 35: 4. Asset Quality
4. Asset Quality GNPA declined to 1.98% from 2.6% QoQ PCR increased to 75% from 51% QoQ NNPA declined to 0.50% from 1.29% QoQ Collection Efficiency for FY22 at 106%
Slide 36: Asset quality
Asset quality AUM Gross Gross Disbursements in ₹ Cr Vintage AUM Yield Advances NPA Q4'FY22 FY22 ▪ GNPA reduced sequentially by ₹ 133 Cr to ₹ Wheels 1996 17,300 14.0% 16,438 408 3,667 9,279 924 Cr (1.98%) from ₹ 1,058 Cr (2.60%) and by SBL-MSME 2007 16,524 15.0% 16,313 421 2,116 4,823 ₹ 578 Cr YoY fr
Slide 37: Credit cost overview
Credit cost overview Credit Cost - Net Impact on P&L Q4’FY22 Q4’FY21 Q3’FY22 FY22 FY21 (All Figures in ₹ Crore) • Legal recourse in terms of SARFAESI etc. is Repossession Loss 36 11 34 120 25 well underway in all the eligible cases (5,000+ POS Loss 11 13 8 30 21 notices issued) which will significan
Slide 38: Details on our provisioning policy
Details on our provisioning policy ➢ The Bank has further strengthened its provisioning policy with the aim to build higher buffers on the balance sheet on an ongoing basis. This makes our provisioning policy among the most conservative in the industry ➢ It is important to note that there have been
Slide 39: Overview of provisions
Overview of provisions Mar’22 Dec'21 Particulars Loan No. Provisions* Coverage No. Loans* Provisions* Coverage Amount* GNPA 43,452 924 653 71%* 46,668 1,058 537 51% Covid related restructuring (Standard) 18,968 1,180 192 16% 20,478 1,263 205 16% Contingency provisions 157 300 Floating provisions 41
Slide 40: 5. Tech Update
5. Tech Update 10.5 Lac digital customers 1.7 lac+ Credit cards, 4.8 lac+ UPI QR 40%+ Customers acquired via digital channels in Q4’FY22 34% increase in MAU
Slide 41: Key Strategic Objectives for tech
Key Strategic Objectives for tech 41
Slide 42: AU 0101 - Growing digital adoption
AU 0101 - Growing digital adoption Customer Base Tech Savvy Customers Digital Customers Monthly Active Users Dec ‘21 ~23.7 Lacs 13.1 Lacs 7.8 Lacs 4.4 Lacs Mar ‘22 ~27.5 Lacs 16.0 Lacs 10.5 Lacs 5.9 Lacs Q-o-Q 16% 22% 35% 34% 133% increase in digital customers 91% increase in Monthly Active Users si
Slide 43: AU 0101 helping us acquire at scale
AU 0101 helping us acquire at scale Urban customers Video banking contribution to total Savings 80% Accounts acquired steadily increasing With an urban-salaried 47% Salaried professionals customer persona ` 41% 22% 10% Q2'FY22 Q3'FY22 Q4'FY22 Customers of 19-32 70% years age 1 Lac+ Video KYC Savings
Slide 44: Our industry leading Video Banking proposition complements the 0101 app
Our industry leading Video Banking proposition complements the 0101 app <5% Of 1 Lac+ video banking customers visit branches for non-cash transactions Video Banking calls have increased more than 3x since launch ▪ Fulfilling complex service requests: 333 − Dormant account reactivation − Address chan
Slide 45: Credit Card continues to scale with strong performance across key metrics
Credit Card continues to scale with strong performance across key metrics 1.7 Lac+ 7:3 49% ₹ 1.1 Lac Cards issued; Monthly Existing to new customers 1st time Credit Card users Average limit per card run rate of ~25,000 cards 40% 60% ▪ Purchase active customers showing healthy trend, better than indu
Slide 46: Deepening our relationship with small merchants with UPI QR and merchant lending
Deepening our relationship with small merchants with UPI QR and merchant lending ▪ Ramped up acquisition − 4.8 lac+ QRs installed till FY22, with 65% activation rate − 1.2 Lacs+ new to bank customers acquired in FY 22 ▪ Establishing meaningful engagement − ~87 Lac transactions in Q4 with 1 Lac+ dail
Slide 47: Investing to build future ready tech capabilities
Investing to build future ready tech capabilities Cloud Migration Core Transformation Data Digitization − Enabling cloud − Oracle flexcube − Data lake being − Real time journey for version 11.6 being developed with transaction risk applications upgraded to 11.10 Accenture as monitoring and through r
Slide 48: 6. Other Key Updates
6. Other Key Updates Sustainability is intrinsic to our business model Increased focus of Sustainability Reporting Expanded Board to 10 members Quarterly updates on Financial and Digital Inclusion
Slide 49: Sustainability @ AU
Sustainability @ AU Environment Social Governance Recognize Environment as a Addressing the Occupational, Good governance is the cornerstone to stakeholder Residential, and Social vulnerabilities building trust Offered preferential loan terms on purchase of EV Two-Wheelers Welcomed more women and pe
Slide 50: Environment
Environment . ▪ Funded solar projects under PM KUSUM scheme, electric vehicles and other green energy projects Through the years, we understood the role of co-existing with nature and the importance of it for our business. Hence, in FY21, we introduced Environment as one of the primary ▪ Electronic
Slide 51: Social
Social ▪ Income generating loans and Social Security Insurance and investment schemes offered to vulnerable and underserved Since the establishment of AU, we have been dedicated to driving a sustainable change in ▪ Agri Loans and assistance for agricultural ancillary activities and services society
Slide 52: Governance
Governance As a bank, we are expected to adapt in an agile manner to the changing market and regulatory expectations. This makes it ▪ Formed a specialized group of Risk, Control, and imperative for us to have a strong yet flexible governance Governance (RCG) to ensure effective internal controls. fr
Slide 53: Financial & Digital Inclusion
Financial & Digital Inclusion Universal Access to Financial Services ➢ 31% of our total touchpoints/branches - 278 are in unbanked rural centres (Tier-VI, population less than 5,000 & Tier-V, population less than 10,000) ➢ Presence in the Special Focus Districts covering 22 Aspirational districts, 1
Slide 54: 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 55: Shareholding pattern – 31st Mar 2022
Shareholding pattern – 31st Mar 2022 Shareholding Pattern Sr. Holding on 31st Mar Key Shareholders No. 2022 1 Promoter & Promoter Group 28.2% Foreign (FC,FPI, Promoter & Promoter FII,NRI): 37.9% Group: 28.2% 2 Wasatch 7.2% 3 Capital Group 6.3% 4 Kotak MF & AIF 4.7% 5 Temasek Holding 4.6% 6 AU Employ
Slide 56: 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 57: Definitions
Definitions a. Credit Cost Provisions against non-performing loans and write offs as % of average loans Core Markets are smaller centres in rural/semi-urban which typically have a local economy built around agriculture and b. Core Markets small businesses, and which have traditionally been our tradi
Slide 58: 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 59: Thank You
THANK YOU For Investor queries contact (details in QR Code): Prince Tiwari | Aseem Pant Email: investorrelations@aubank.in
AU Small Finance Bank — Q4 FY2022 Earnings Presentation on 6ix