Au Small Finance Bank Limited · NSE:AUBANK
Au Small Finance Bank — Investor Presentation (March 2024)
102 slides from Au Small Finance Bank's investor presentation, Mar 18, 2024
Slide 1: Regulation 30 cover letter to exchanges
Ref. No.: AUSFB/SEC/2023-24/376 Date: March 18, 2024 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 Code
Slide 2: 10 years of banking journey
cement AU) 10 years of banking journey
Slide 3: Key Management personnel present
Key Management personnel present ✓ Mr. Sanjay Agarwal (MD & CEO) From Fincare Small Finance Bank: ✓ Mr. Uttam Tibrewal (Executive Director) ✓ Mr. Rajeev Yadav (MD & CEO) ✓ Mr. Deepak Jain (Chief Risk Officer) ✓ Mr. Pankaj Gulati (Chief People Officer, Chief Marketing Officer & Chief Operating Office
Slide 4: Agenda
Agenda 1. About us 2. Our recent financial performance - Update on • Credit Cards • Retail Assets • Commercial Banking 3. Way forward to 2027 4. AU-Fincare merger 5. Our Investment thesis 6. Q&A 7. CEO address 3
Slide 5: About us
About us AU@2027 4
Slide 6: Confluence of Scale, Growth, Asset Quality and Profitability
Confluence of Scale, Growth, Asset Quality and Profitability All figures as of Dec’23 ₹ 80,120 Cr ₹ 67,624 Cr ~46.8 lac 1,049 50% CAGR^ 32% CAGR ^ Customer Base Touchpoints Deposits Gross Advances 33% 1.98%* / 0.68% 19.6% / 20.8% 1.7% / 14.4% CASA Ratio GNPA / NNPA Ratio Tier-1 Ratio / CRAR Wtd. Avg
Slide 7: Strong execution track record on the banking platform
Strong execution track record on the banking platform ₹ in Crores Deposit Gross Advance^ Balance Sheet Asset 50% 32% 67,624 80,120 34% 59,158 1,01,176 69,365 90,216 46,789 52,585 69,078 35,356 35,979 27,233 51,591 26,164 22,994 42,143 19,422 13,413 32,623 7,923 18,833 FY18 FY19 FY20 FY21 FY22 FY23 D
Slide 8: Amidst multiple headwinds
Amidst multiple headwinds 2016 2017 2018 2019 2020 2021 2022 2023 Demonetization GST NBFC Crisis Bank Crisis Global Pandemic Ukraine High Inflation Crisis & Interest Rate Despite being industry level headwinds, as a new Bank, our challenges were significantly more in terms of higher costs, increased
Slide 9: Key initiatives and achievements
Key initiatives and achievements ❑ Shifted base to Mumbai early in the banking journey ▪ Despite higher operating costs ▪ Helped to attract strong talent ▪ ~75% of businesses being led from Mumbai ❑ Created a full-fledged bank in limited cost and time, despite headwinds, in a seamless way ❑ Offering
Slide 10: Key initiatives and achievements
Key initiatives and achievements ❑ Strong risk management and governance capabilities ▪ Board is chaired by Shri H.R. Khan, Ex-Deputy Governor, RBI ▪ Board of Directors comprise of 9 members, with 7 being independent directors including 2 women directors. ❑ Established AU as a well recognized brand
Slide 11: Products and services aligned in 5 business groups
Products and services aligned in 5 business groups 3 Retail Assets 1 Urban Branch Banking Insurance o Wheels (Focused on Urban Affluent market) o Micro Business Loan (MBL) Payments o Home Loan Wealth & PMS 2 Swadesh Banking, 4 Commercial Banking Government and CMS o Business Banking Wholesale Deposi
Slide 12: Our recent financial performance
Our recent financial performance 11
Slide 13: Margins impacted by fixed rate book and changing portfolio mix
1. Margins impacted by fixed rate book and Changing Portfolio Mix CoF increased while Yields have declined Incremental CoF has risen sharply from low base 14.0% 15.4% 14.7% 14.7% 13.6% 13.6% 13.2% 13.5% 14.3% 14.4% 12.7% 13.7% 13.4% 13.3% 8.4% 7.9% 7.8% 7.1% 7.6% 8.0% 7.7% 7.5% 7.7% 7.7% 7.6% 7.4% 6
Slide 14: Credit costs have started to normalize post Covid lows
2.1 Credit Costs have started to normalize post Covid lows Total credit cost impact on P&L incl. standard provision but excluding any contingency buffer Wheels Wheels MBL Housing 3.04% 2.37% 1.05% 0.94% 0.79% 0.64% 0.63% 0.73% 0.67% 0.44% 0.63% 0.45% 0.40% 0.47% 0.40% 0.50% 0.55% 0.42% 0.35% 0.21% 0
Slide 15: Credit cost in Commercial Banking & Credit Cards
2.2 Credit cost in Commercial Banking & Credit Cards Total credit cost impact on P&L incl. standard provision but excluding any contingency buffer Commercial Banking Credit Card 4.84% 3.71% 1.26% 0.73% 0.50% 0.47% 0.30% 0.40% 0.22% 0.20% 0.06% FY18 FY19 FY20 FY21 FY22 FY23 9M'FY24 FY21 FY22 FY23 9M'
Slide 16: Overall portfolio credit cost has started normalizing
2.4 Overall portfolio credit cost has started normalizing All products credit cost impact on P&L incl. standard provision With Contingency Provision Without Contingency provision 2.34% 2.12% 0.91% 1.05% 0.86% 0.91% 0.62% 0.62% 0.50% 0.55% 0.56% 0.43% 0.38% 0.25% FY18 FY19 FY20 FY21 FY22 FY23 9M'FY24
Slide 17: Front loaded investments, to build complete product suite
3. Front loaded investments, to build complete product suite Digital Brand (in Cr) Verticals Credit Card Merchant Video Banking Total Initiatives Campaign* Investments 364 73 46 25 91 599 Since Income generated 197 10 14 0 0 222 inception till FY23 Credit Cost 39 3 0 0 0 42 PBT (206) (65) (32) (25)
Slide 18: Cost to Income remain elevated due to NIM compression
4. Cost to Income remain elevated due to NIM compression 1 Our productivity has increased…. Employees (‘000) Business Growth ('000 Cr) Business per Employee 55% (Rs Cr) 5.4 27.8 28.9 155 59% 52% Mar'22 3.6 100 80 76 Dec'23 53 48 Mar'22 Dec'23 Deposits AUM Total Business Mar'22 Dec'23 2 …and we have
Slide 19: Customer centricity focus of policy makers
Customer centricity focus of policy makers Credit Card – restriction on Charges cannot be applied while the limit is over utilized w.e.f. 1st October 2022 overlimit charging No Penal interest is allowed; only penal charges can be levied w.e.f. April 1, 2024 Penal Charges No increase in the interest
Slide 20: NIM compression & increased provisions led to moderation in RoA
NIM compression & increased provisions led to moderation in RoA 1.8% RoA for Q3’FY24 is 23 bps 1.5%; Q4’FY24 to be Net Interest further moderated Income 8 bps 1.6% Operating Exp 36 bps 23 bps Other Provisions Income FY’23 9M’FY24 19
Slide 21: Delayed rate cuts leads to higher cost of funds in FY25
Delayed rate cuts leads to Cost of funds likely to be higher in FY25 Financial Year Cost of funds Change in Cost of funds* FY22 5.95 FY23 5.96 + 1 bps FY24 (P) 6.80-6.85 + 85-90 bps FY25 (P) Starts at ~7.10% + ~40-45 bps over FY24 *Repo rate increased by 250 bps between May’22 to Feb’23 ❑ Cost of Fu
Slide 22: To summarize
To summarize …. 1. Rising interest rate scenario leading to increase in cost of funds by 85-90 bps • Limited transmission of increased interest cost on asset book • In 9M’FY24, of the 131 bps increase in incremental cost of funds, Bank was able to pass on 38 bps on incremental disbursements • Portfo
Slide 23: Credit Cards
AU SMALL FINANCE BANK Credit Cards AU@2027
Slide 24: Credit Cards - Key Objectives
Credit Cards-Key Objectives Provide full suite Target key customer Strengthen customer segments - Millenniums & acquisition for the Bank banking products Digital Savvy Deepen engagement Acquire credit worthy Drive credit penetration with existing customers customer in tier 2 &3 markets. 23
Slide 25: Business Volume - Credit Cards
Business Volume-Credit Cards NEW TOTAL CIF SPENDS ENR ISSUANCE 3.99 L 8.31 L 12,468 Cr 2,740 Cr Monthly Avg. Avg. Monthly Card Spends ~ ₹1,386 Cr Issuance ~45K Numbers as of Dec’23 24
Slide 26: Key Matrices
Key Matrices PA TPC SPC 60% 3.0 20K PA means at least one txn in Txn per card Spend per card calendar month ECOM SPEND GNPA NNPA 60% 1.93% 0.25% Online spend share Numbers as of Dec’23 25
Slide 27: Sourcing Mix
Sourcing Mix Salaried ETCC Bureau>=760 68% 84% 70% Existing to credit card customers Bureau score profile Customer Occupation Limit Super CAT A/ URBAN Utilization CAT A/GOVT 68% 70% 19% Salaried profile mix Geographical mix Avg. credit card limit utilization 26
Slide 28: Credit Calibrations
Credit Calibrations We have done calibrations to our Underwriting Engine (BRE) in past 12 months basis our learnings which is showing signs of significant reduction in delinquency trends • Early Warning Indicators to Identify stressed accounts in combination of bureau score, bureau leverage, existin
Slide 29: Credit Update
Credit Update 30+ % - 3MOB 30+ % - 6MOB 1.12% 3.30% 2.15% 0.50% Mar'23 Nov'23 Mar'23 Aug'23 60+ % - 6MOB 60+ % - 9MOB 2.16% 4.29% 1.37% 3.30% Mar'23 Aug'23 Mar'23 May'23 28
Slide 30: Market share
Market share CIF market share shows Steady growth in spend consistent growth market share. 29
Slide 31: Retail Assets — Credit
AU SMALL FINANCE BANK Retail Assets — Credit AU@2027
Slide 32: Portfolio Snapshot (As of Dec'23) - Wheels
Portfolio Snapshot (As of Dec’23) - Wheels Granular Book Average Average >730 CIBIL AUM Tenure Ticket Size Score <10 Lakh ticket Customers 50% of Portfolio 27,004 Cr 42 Months ₹ 2.8 Lacs NTC @ 11% 95 % Portfolio Yield Unique Average EMI NTB 72% Gross NPA% Customers Amount ETB 28% 13.9% 8.4 Lacs ₹ 12
Slide 33: Portfolio Snapshot (As of Dec'23) - Wheels
Portfolio Snapshot (As of Dec’23) - Wheels Loan Type wise AUM 12,985 14,823 17,303 22,833 27,004 1% 2% 2% 2% 3% 6% 8% 9% 10% 10% 34% 34% 34% 36% 36% 59% 56% 54% 52% 51% Mar'20 Mar'21 Mar'22 Mar'23 Dec'23 NEW Used Tractor 2WL ❑ High Yield Products viz. Used, Tractor and 2W on rise in the book ❑ Used
Slide 34: Wheels – Book Trends for 8 Quarters
WHEELS – Book Trends for 8 Quarters AUM CURRENT% 27,004 84.62% 84.34% 84.40% 24,384 25,454 84.17% 22,833 83.25% 21,477 18,614 20,095 81.91% 17,300 80.48% 79.47% MAR'22 JUN'22 SEPT'22 DEC'22 MAR'23 JUN'23 SEPT'23 DEC'23 MAR'22 JUN'22 SEPT'22 DEC'22 MAR'23 JUN'23 SEPT'23 DEC'23 AUM 17,300 18,614 20,09
Slide 35: Vintage-wise NPA Trend - Wheels
Vintage-wise NPA Trend - Wheels 10.00% A. 0 - 12 Months B. 13 - 24 Months C. 25 - 36 Months 9.00% 8.15% 8.06% 8.00% 7.00% 5.87% 6.00% 5.16% 4.90% 5.00% 4.06% 4.03% 4.00% 3.00% 2.52% 1.80% 2.04% 1.80% 2.00% 1.33% 0.69% 1.00% 0.36% 0.33% 0.25% 0.20% 0.18% 0.00% D EC'2018 D EC'2019 D EC'2020 D EC'20 21
Slide 36: Static Pool 90+ DPD – Till Dec'23 - Wheels
Static Pool 90+ DPD – Till Dec’23 - Wheels *Excluding ECLGS/TA/OD *90+ DPD% includes Repo Loss and Write off represents principal outstanding as a percentage of disbursement during the period ❑ The post second wave COVID portfolio has been compared with the Pre COVID book on a static basis. ❑ FY22 b
Slide 37: MBL Portfolio Snapshot (as on 31st Dec'23)
MBL Portfolio Snapshot (as on 31st Dec’23) Granular Book Average Average >730 CIBIL AUM Tenure Ticket Size Score Average LTV 43% 20,858 Cr. 9 Years ₹ 10.59 Lac 46% NTC @ 18% Portfolio Yield Unique Average EMI Gross NPA% Customers NTB 72% Amount ETB 28% 14.9% 1.93 lakh ₹ 17,625 2.96% All data at AUM
Slide 38: Shift of Ticket-size post pandemic
Shift of Ticket-size post pandemic Loan Ticket Size wise distribution 37% 34% FY 19-20 25% 24% 24% 19% 21% 17% FY 23-24 (Dec'23) Upto 10 lacs > 10 to 15 lacs > 15 to 25 lacs > 25 lacs ❑ During pandemic, due to the business model of daily/weekly earnings & high dependence on local footfall of custome
Slide 39: MBL – Book trends for 8 quarters
MBL – Book trends for 8 quarters AUM CURRENT% 19,923 20,342 20,858 78.84% 19,510 78.30% 17,467 18,215 77.93% 78.00% 16,524 16,912 76.82% 75.55% 74.99% 75.09% MAR'22 JUN'22 SEPT'22 DEC'22 MAR'23 JUN'23 SEPT'23 DEC'23 MAR'22 JUN'22 SEPT'22 DEC'22 MAR'23 JUN'23 SEPT'23 DEC'23 AUM 16,524 16,912 17,467 1
Slide 40: Vintage-wise NPA Trend - MBL
Vintage-wise NPA Trend - MBL A. 0 - 12 Months B. 13 - 24 Months C. 25 - 36 Months 12.00% 10.78% 11.00% 10.00% 9.00% 8.00% 7.00% 6.00% 5.00% 4.33% 3.68% 4.00% 3.27% 3.09% 3.00% 2.24% 1.31% 1.50% 1.56% 2.00% 1.09% 1.22% 1.00% 0.16% 0.44% 0.08% 0.08% 0.24% 0.07% 0.16% 0.00% DEC'18 DEC-19 DEC-20 DEC-21
Slide 41: Static Pool 90+ DPD - Dec'23 – MBL
Static Pool 90+ DPD-Dec’23 – MBL *Excluding ECLGS *90+ DPD% includes Repo Loss and Write off represents principal outstanding as a percentage of disbursement during the period ❑ The post second wave COVID portfolio has been compared with the Pre COVID book on a static basis. ❑ FY22 book built post s
Slide 42: HL Portfolio Snapshot (as on 31st Dec'23)
HL Portfolio Snapshot (as on 31st Dec’23) Average Average Customer Mix >730 CIBIL AUM Tenure Ticket Size Score Salaried – 39% 55% 5,453 Cr. SENP – 61% 210 Months ₹ 12 Lac NTC @ 22% Portfolio Yield Unique Average EMI NTB 70% Gross NPA% Customers Amount ETB 30% 11.6% 46K ₹ 12, 212 0.55% All data at AU
Slide 43: Home Loan – Book trends for 8 quarters
Home Loan – Book trends for 8 quarters AUM CURRENT% 5,453 95.60% 5,066 95.56% 4,695 4,281 3,693 94.94% 94.95% 94.82% 3,365 94.53% 3,004 2,654 94.32% 93.89% MAR'22 JUN'22 SEPT'22 DEC'22 MAR'23 JUN'23 SEPT'23 DEC'23 MAR'22 JUN'22 SEPT'22 DEC'22 MAR'23 JUN'23 SEPT'23 DEC'23 AUM 2,654 3,004 3,365 3,693
Slide 44: Vintage-wise NPA Trend - HL
Vintage-wise NPA Trend - HL 986 2,013 3693 5299 *Excluding Staff loan ❑ The delinquency trend is stable across the three vintage buckets. ❑ Indicating no deterioration in Credit quality of portfolio in last 3 years of sourcing. ❑ 74% of the book is less than 24 months vintage. The portfolio is yet t
Slide 45: Commercial Banking Business
Commercial Banking Business 44
Slide 46: Commercial Banking – Business Segments
Commercial Banking – Business Segments Commercial Banking Business Banking Agri Banking NBFC Lending Real Estate Group TG: MSMEs engaged in TG: MSMEs engaged TG: Small and Mid Size TG: Small and Mid size Manufacturing, Trading, in Agri Value Chain, NBFCs and HFCs Developers in select T1 EPC and Serv
Slide 47: Commercial Banking – Relationship Based Transactional Lending
Commercial Banking – Relationship Based Transactional Lending Growing Target Market Segment 360° Opportunities Aligned to Diversified Liability and Franchise Granular Current Salary Insurance Corporate Credit Loan Book Account Mandate Card Larger Pool Holistic and of Fee Complete Income Banking Tran
Slide 48: Commercial Banking – Profitable and Sustainable Book
Commercial Banking – Profitable and Sustainable Book Low Cost Of Acquisition Net Interest Margin (NIM) ❑ Sourcing from Branches is growing with ageing of Branches + ❑ Working Capital Book Grows Organically with Enhancements Low Opex – Cost to Income Diversified Fee Income Lower Credit Cost – GNPA of
Slide 49: Diversified Fee Income: Business Banking & Agri Banking
Diversified Fee Income : Business Banking & Agri Banking Business Banking Agri Banking Renewal Fee Renewal Fee Trade 16% Trade 15% Income Income 20% 46% Fee Income Fee Income 1.64% Processing Commitment & 0.82% Fee other Income Processing 31% 3% Fee Commitment & Cross Sell 47% other Income Cross Sel
Slide 50: Scaling Up Liability Relationship
Scaling Up Liability Relationship Commercial Banking Break Up on Separate Book Level Business Banking Agri Banking CA 905 Cr. SA 379 Cr. CA CA 5,955 Cr 276 Cr. 127 Cr. TD 4,672 Cr SA 2,895 Cr 214 Cr. 742 Cr SA TD 93 Cr. TD 521 Cr. 2,405 Cr. POS 70 % of Self Funded Book 35% 42% 14% 12,900 A/c 6,900 A
Slide 51: Commercial Banking Credit
Commercial Banking Credit 50
Slide 52: Portfolio Snapshot
Portfolio Snapshot Commercial Banking Comparative Snapshot as on 31st Dec 2023 Sep-23 Average Principal Outstanding Ticket GNPA GNPA GNPA GNPA Commercial Banking Customer Non - Fund + Size POS POS % POS POS % Fund Fund Non-Fund (Fund) Business Banking 6,646 6,763 3,292 10,055 1.29 35.7 0.53% 16.56 0
Slide 53: Key Target Segment for Business Banking and Agri Banking
Key Target Segment for Business Banking and Agri Banking MSME & Agriculture Book ~ 10,575 Cr Agri Sub-Classification 158; 1% Micro 34; 1% Agri-Ancillary 116; 5% 156; 7% 1,825; 17% Small Agri-Infra 2,389; 23% 1,668; 16% Medium 4,535; 43% Agri & Allied 2,083; 87% Agri FPO ❑ MSME and Agriculture portfo
Slide 54: Commercial Banking – Book trends for 8 quarters
Commercial Banking – Book trends for 8 quarters AUM (INR in Cr) CURRENT BOOK% 16,226 98.57% 98.43% 14,697 12,689 13,385 98.84% 98.08% 11,121 97.90% 9,659 98.27% 7,949 8,543 97.32% 97.83% MAR'22 JUN'22 SEPT'22 DEC'22 MAR'23 JUN'23 SEPT'23 DEC'23 MAR'22 JUN'22 SEPT'22 DEC'22 MAR'23 JUN'23 SEPT'23 DEC'
Slide 55: 360° Credit Assessment: On-Boarding Framework
360° Credit Assessment: On-Boarding Framework Promoters Vintage + Industry Experience ❑ Adherence to Regulatory Guidelines Committee Based Approval ❑ Adoption of Technology for Data Mechanism Management Business Analytics Analysis Profiling ❑ Customer Interaction through Approval Digital Platform Bu
Slide 56: Portfolio Management and Monitoring
Portfolio Management • Geography-wise Portfolio Segmentation • CB follows Branch Banking footprints & Portfolio • Industry-wise Classification Monitoring • Exposure-wise Portfolio Segmentation business is diversified to 12 States • Identifying Early Warning Signals ( EWS ) • Working capital book is
Slide 57: Way forward to 2027
AU SMALL FINANCE BANK Way forward to 2027 AU@2027
Slide 58: Proforma merged financials – Dec'23
Proforma merged financials – Dec’23 ₹ ₹ ₹ Balance Net Deposits AUM PAT Customer Touchpoints Sheet worth (9M’FY24) Post Merger (proforma 1,16,695 14,499 89,854 89,529 1,472 1.05 basis 2,352 Cr Cr* Cr Cr Cr Cr Dec’23) AU Pre – 1,01,176 12,167 80,120 76,177 1,164 46.8 Merger 1,049 Cr Cr Cr Cr Cr Lacs (
Slide 59: AU @ 2027 guidance
AU @ 2027 guidance Deposit growth CAGR will be ~23-25% with focus on individual and retail deposits Asset book growth will be in line with deposit growth with higher growth from businesses with higher RoA Asset quality to remain within range; PCR incl. tech write-off would be around 65% - 70% By 202
Slide 60: Way forward to 2027
Way forward to 2027 1 2 3 4 5 Portfolio mix to Credit Costs to Calibrating Focus on branch Fincare merger shift in favor of remain within investments banking benefits higher yielding, range based on profitability higher RoA learnings so far assets Way forward to 2027 59
Slide 61: Portfolio mix to shift towards high yield, high RoA businesses
1. Portfolio mix to shift towards high yield, high RoA businesses Grow higher yielding, higher RoA businesses 30% 25-28% 70% 72-75% CAGR ~25% CAGR 20%-22% CAGR 28-32% Wheels MBL Fincare – MFI/SBL/AHL/Gold Loan and others 9M'FY24 FY27 (P) High Yield - High RoA businesses include Wheels, MBL, REG, NBF
Slide 62: Calibrating Investments based on learnings
2. Calibrating Investments based on learnings ❑ No significant newer investments envisaged till AU@2027 ❑ Platform buildout is largely complete and incremental expenses/investment will only be variable in nature to sweat the existing investments New business Action Outlook - Moderating card issuance
Slide 63: Focus on Branch banking Profitability
3. Focus on Branch banking Profitability Currently, ~25% of our liability branches (excl. unbanked) are profitable on fully loaded basis i.e. including allocations from branch opex to central cost - We will endeavor to make 65%+ of our branches, live as on Dec’23, profitable by AU@2027 Key levers to
Slide 64: Focus on Branch banking Profitability
3.1 Focus on Branch banking Profitability Higher sourcing of premium quality customers…. Branch banking is steadfastly focused on sourcing affluent and mass affluent customers, internally referred as iRP customers (iRP = Ivy, Royale and Platinum) iRP customers - are 75% of new savings customers sour
Slide 65: Merger benefits and synergies to help RoA
4. Merger benefits and synergies to help RoA • Strong and seasoned management team with ~15000 employee based. • Access to South India – expanded distribution for AU products over next 3 years • RoA and Book value accretive • Higher yielding, higher RoA businesses to help increase disbursement yield
Slide 66: Fincare merger timeline
Fincare merger timeline 4th Mar’24 1st Apr’24 Apr’24 to 29th Oct’23 27th Nov’23 23rd Jan’24 Mar’25 Announcement CCI Approval RBI Approval Full Integration of Merger Shareholder’s Approval Effective date Among the fastest merger approvals in ~4.5 months 65
Slide 67: Approach towards seamless Fincare integration
Approach towards seamless Fincare integration Assets ❑ Seasoned business run by an experienced team which will become part of AU Family ❑ All key asset businesses would continue within the Fincare unit at AU Liabilities ❑ Deposits business would be integrated with AU’s Branch Banking group, with AU
Slide 68: Fincare business shall become the 6th business group
Fincare business shall become the 6th business group 3 Retail Assets 1 Urban Branch Banking Insurance o Wheels (Focused on Urban Affluent market) o Micro Business Loan (MBL) Payments o Home Loan Wealth & PMS 2 Swadesh Banking, 4 Commercial Banking Government and CMS o Business Banking Wholesale Depo
Slide 69: Prioritizing portfolio mix and returns to reach 1.8% RoA by FY27
To summarise… we are prioritizing portfolio mix and returns from investments to reach back to 1.8% RoA by FY27 Opex Savings via investment Credit Cost to calibration & Operating remain within this efficiency range 1.80% • Calibrated approach on new investments • Credit cost has Sustained • Focus on
Slide 70: Key macro monitorable
Key macro monitorable Basis current interest outlook, we Changes in Enhanced customer centricity and Interest have assumed rate cuts to start policy customer focus from policy makers can Rate Cycle from H2’FY25 framework have income/cost impacts Strong competitive intensity for Any prolonged geopoli
Slide 71: Key internal monitorable
Key internal monitorable Current To increase by 100 bps to 150 Account growth bps High Yield, High ROA Business to Loan asset Mix form 72%-75% Endeavor to make 65% Branch banking profitability branches profitable among branches live as on Dec’23 Asset quality of Credit Cards Keep in-line with indust
Slide 72: Our Investment Thesis
AU SMALL FINANCE BANK Our Investment Thesis AU@2027
Slide 73: Building a Forever Bank
Building a Forever Bank Navigating to Prosper Foundation, built-up and stabilization ----------------------------------------- Strong execution track record 2017-2023 Strategic Path to 2027 Significant growth opportunity Sustainable growth and consolidation -----------------------------------------
Slide 74: Highly differentiated banking franchise with strong execution track record
Highly differentiated banking franchise with strong execution track record 80,120 69,360 67,620 59,160 Deposits and 52,580 Gross Advances 35,980 35,360 46,790 One of the fastest (INR Cr.) 22,990 26,160 27,230 growing banking 19,420 7,920 13,410 franchises 4.5% Best-in-class asset 4.3% GNPA % on AUM
Slide 75: Significant growth opportunity as India grows into a $7 Tn economy
Significant growth opportunity as India grows into a $7 Tn economy by 2030 6.3% ~$30 Tn ~23% Projected GDP by Value of exports as a Our GDP growth 2047 percentage of GDP in FY22 rate in next 5 years Rising share in Global GDP from 3% in 1990 to ~9% in 2028 Healthy FDI flows ~9% Country % Growth in F
Slide 76: Product: A full-suite with digital capabilities
Product: A full-suite with digital capabilities Deposit Franchise Diversified Asset Products Third Party Products Proposal COMMERCIAL DEPOSITS RETAIL ASSETS INSURANCE WEALTH ASSETS Current Account Wheels Working Cap. Loans Life Mutual Fund Savings Account Micro Business Loan Business Loans Health AS
Slide 77: Distribution: Reaching Pan India post merger
Distribution: Reaching Pan India post merger 02 16 94 ▪ Merger with Fincare to more than double the total touchpoints to 2,352 in 25 States 04 174 and UTs 58 o 9 States with >100 touchpoints 01 02 o 4 States with 50-100 touchpoints 16 56 12 ▪ Significant opportunity to expand deposit 44 and asset fr
Slide 78: Brand: Increasing Brand Equity from Badlaav Humse Hai Campaign
Brand: Increasing Brand Equity from “Badlaav Humse Hai” Campaign Brand Awareness Lift 11 times Brand Consideration Lift 10Cr 54% Brand Ambassador 7Cr + Badlaav Campaign 77
Slide 79: Seasoned Management Team with Extensive Track Record
Seasoned Management Team with Extensive Track Record Sanjay Agarwal Founder, Uttam Tibrewal Vimal Jain Yogesh Jain Manmohan Vivek Tripathi Managing Executive Chief Financial Chief Parnami Head of Human Director and Director Officer Operating Company Resources CEO Officer Secretary 21+ 14+ 14+ 15+ 4+
Slide 80: In Conclusion
In Conclusion A well-governed and compliant retail bank with strong execution track-record and a long-runway for delivering industry leading growth with superior returns 79
Slide 81: Abbreviations
Abbreviations BRE Business Rule Engine NTB New to Bank CASA Current Account Deposits and Savings Account Deposit NTC New to Credit CMS Cash Management System OPEX Operating Expenses CoF Cost of Fund P&L Profit & Loss Statement CRAR Capital Adequacy Ratio PAT Profit After Tax DPD Days Past Due PSL Pr
Slide 82: Definitions
Definitions a. Market Share Market share calculated as per the data reported by RBI for Scheduled Commercial Banks 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 bee
Slide 83: Fincare Presentation
AU SMALL FINANCE BANK Fincare Presentation AU@2027
Slide 84: Investor Meet – The Fincare story
Investor Meet – The Fincare story March 2024
Slide 85: Contents
1 Powering the Unified Bank: The Fincare value-add Contents 2 Managing Risk and Optimizing Return: The Fincare approach 84 © 2024 Fincare SFB
Slide 86: Powering the Unified Bank: The Fincare value-add
1. Powering the Unified Bank: The Fincare value-add 85 © 2024 Fincare SFB
Slide 87: Fincare – a well-rounded inclusion-focused digital-bank
Fincare – a well-rounded inclusion-focused digital-bank Data as of Dec 23 Business model focused on Deep Rural financial inclusion in rural and 8.6 Lakh ~5 36.5% Franchise semi-urban areas (presence in New customers Products per Share of top 3 92K villages and 359 districts) added 9MFY241 Household1
Slide 88: Fincare – a well-rounded inclusion-focused digital-bank
Fincare – a well-rounded inclusion-focused digital-bank Data as of Dec 23 Granular Customer base across retail, HNI 9,734 Cr ~80% ~98% senior citizen, and HENRY1 Share of Term Deposits Deposit Base segments Total Deposits Retail Deposits with tenor > 6M 100% 100% ~200 Digital-First Sound tech delive
Slide 89: Key Performance Metrics
Key Performance Metrics Deposits (Rs Cr) Gross Loan Portfolio (Rs Cr) Deposits 16000 GLP 39 13,352 50.0 14000 20 20 20 23 9,911 40.0 77 92 86 80 9,734 12000 7,600 42 30.0 12,000 58 6,456 8,033 100 10000 8000 5,342 6,072 20.0 10,000 8,000 6,000 2,043 4,654 5,318 80 80 60 6000 3,530 10.0 0.0 4,000 40
Slide 90: Diversified and granular loan book
Diversified 1 and granular loan book Product Product % of total portfolio GLP (Rs Cr) Characteristics1 Average Disbursal Ticket Size - ~INR 0.4 Lakh 79.… 76.… 61.… 57.… CAGR– 18% 4,843 5,824 6,045 7,681 Average Tenor - 2 years Microfinance Loan Portfolio ROI - 25.1% FY 21 FY 22 FY 23 9M FY 24 FY 21
Slide 91: Managing Risk and Optimizing Return: The Fincare approach
2. Managing Risk and Optimizing Return: The Fincare approach 90 © 2024 Fincare SFB
Slide 92: Microfinance
Microfinance Joint Liability Group model of lending for income generating activities to women primarily in rural areas 15 Years + experience in Microfinance operations Focus on business efficiency Top 3 State No. of Stable Microfinance team with average vintage of 8.8 Sole lender to years Concentrat
Slide 93: Microfinance
Microfinance Business Model built on strong principles and controls perfected over the years GNPA1 & NNPA1 Credit Cost & PCR2 GNPA % Net NPA % PCR% Credit cost% 8.5 86.4 79.9 68.6 61.0 79.2 72.3 5.5 3.5 3.1 1.0 0.6 1.8 0.7 1.3 1.7 1.3 4.4 7.5 5.0 1.4 0.1 0.1 0.4 FY 19 FY 20 FY 21 FY 22 FY 23 9M FY F
Slide 94: Microfinance - Risk Mitigation
Microfinance - Risk Mitigation Proactively implemented mitigation strategies considering the risks in the Microfinance industry External factors affecting the business Fraud, evergreening, ghost loans and Cyclic nature of business with period of such as political risk, natural calamity, pipelining i
Slide 95: Small Business Loan
Small Business Loan Serving the needs of self-employed from informal segment Focus on risk-managed growth End-to-end paperless & automated origination workflow Average using proprietary D’Lite platform, integrated with 2 credit Active Loan Number of bureaus Loan To Value Disbursement Count Customers
Slide 96: Affordable Housing Loan
Affordable Housing Loan Fulfilling the dream of home ownership for urban & semi-urban customers Focus on risk-managed growth End-to-end paperless & automated origination workflow using Average Active Loan Number of proprietary D’Lite platform, integrated with two credit bureaus Loan To Value Disburs
Slide 97: Gold Loans
Gold Loans Bridging the need for loan for business expansion through affordability and distribution Focus on risk-managed growth End-to-end digital journey with mandatory customer Average biometric authentication during disbursement and closure, Active Loan Number of Loan To Value Disbursement reduc
Slide 98: In-house Digital: Key to great customer experience
In-house Digital: Key to great customer experience, better productivity and enhanced efficiency ~200 strong in-house digital team combined with 100% cloud-native digital stack emulates the DNA of a fintech Customer Entire digital stack built in-house – transitioned to AWS for hyper Governance scalab
Slide 99: Thank You!
C e & Finca re YEARS Wish More Get More Thank You ! - C10100 a |oMo a : . ‘nwo aK |
Slide 100: Annexure - Formulae
Annexure - Formulae GLP Total Gross loan Portfolio incl IBPC & Sec Balance Sheet Secured Share Total Gross loan Secured portfolio/Total Gross loan Portfolio Deposits Total Deposits CASA (CA+SA)/Total Deposits Net-worth Capital + ESOP + Reserves & Surplus CRAR (Tier I Capital + Tier II Capital)/RWA L
Slide 101: 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 102: Thank You
ea BADLAAV HUMSE HAI THANK YOU
AU Small Finance Bank — Investor Presentation (March 2024) on 6ix