Au Small Finance Bank Limited · NSE:AUBANK
Au Small Finance Bank — Q2 FY19 Earnings Presentation
50 slides from Au Small Finance Bank's earnings presentation, October 2018
Slide 1: Investor Presentation 1H / Q2FY19
Investor Presentation 1H / Q2FY19 A SCHEDULED BANK I FORTUNE INDIA 500 COMPANY Retail Focused I Differentiated I Well Capitalized I Fast Growing I Customer Centric Oct, 2018
Slide 2: Table of Contents
Table of Contents 1. 1H / Q2FY19 Performance Summary & Key Updates 2. Retail Assets & Small & Mid Corporate Assets - Snapshot 3. Liabilities & Branch Banking - Snapshot 4. Treasury - Snapshot 5. Digital Bank - Snapshot 6. About AU Small Finance Bank 7. Historical Financial & Operational performance
Slide 3: 1H / Q2FY19 Performance Summary & Key Updates
1. 1H / Q2FY19 Performance Summary & Key Updates 3
Slide 4: 1H / Q2FY19 Key Highlights
1H / Q2FY19 Key Highlights 395 Branches1 11 States 16 Offices 292 ATMs 12,109 employees 88 Asset Centers Loan Assets Under Active Loan Disbursement Deposit Accounts Deposit Base3 CASA Ratio4 Management2 Accounts INR Crore INR Crore 20,219 INR Crore 7,76,958 12,869 4,15,893 7,004 3,03,756 12,209 4,03
Slide 5: 1H / Q2FY19 Key Highlights
1H / Q2FY19 Key Highlights Balance Sheet Size Net worth Gross NPA Net NPA CRAR INR Crore INR Crore 24,780 2,929 2,113 12,332 Vs. Vs. Vs. 3.1% 2.1% 23.5% 30-Sep-17 30-Sep-18 30-Sep-17 30-Sep-18 (30-Sep-17) (30-Sep-17) (30-Sep-17) Total Income Net Interest Income PAT INR Crore INR Crore INR Crore 1,50
Slide 6: 1H / Q2FY19 - Key Updates
1H / Q2FY19 - Key Updates UPGRADE OF CREDIT RATING CRISIL upgraded our long term rating to “CRISIL AA- / Stable” from “CRISIL A+ / Positive” (3rd Oct 18); Short Term Rating re-affirmed at “CRISIL A1+” PROMOTER CONTRIBUTION, OWNERSHIP, STRUCTURE AND LISTED RELATED SFB GUIDELIENS Fully Compliant;
Slide 7: Marginal improvement in Opex drives small uptick in 1HFY19 ROE
Marginal improvement in Opex drives small uptick in 1HFY19 ROE RoA1 (%) RoE1 (%) 13.1% 13.2% 12.9% 2.3% 2.3% 12.7% 12.7% 1.5% 1.6% 1.6% Q2FY18 Q1FY19 Q2FY19 1HFY18 1HFY19 Q2FY18 Q1FY19 Q2FY19 1HFY18 1HFY19 ROA / ROE – Components NII1 (%) Other Income3 (%) Opex1 (%) 7.5% 7.3% 3.2% 5.8% 4.8% 4.7% 5.1%
Slide 8: Improved Collections / Reductions Drove Asset Quality
Improved Collections / Reductions Drove Asset Quality Movement of Gross NPA Q2FY18 Q1FY19 Q2FY19 (All Figures in INR Crore) Unaudited Unaudited Unaudited Opening Gross NPA 217 270 334 Additions during the period 84 99 95 Reductions during the period 35 35 57 Gross NPA (closing) 266 334 371 Gross NPA
Slide 9: Well Capitalized
Well Capitalized (INR Crore) Sep-17 Jun-18 Sep-18 Unaudited Unaudited Unaudited Total Risk Weighted Assets 8,380 13,212 15,459 Tier I Capital 1,884 2,653 2,660 Tier II Capital 85 85 87 Total Capital 1,969 2,738 2,747 CRAR 23.5%1 20.7% 17.8% Tier I CRAR 22.5%1 20.1% 17.2% Tier II CRAR 1.0%1 0.6% 0.6%
Slide 10: Profit & Loss Statement – Q2FY19 NII Up 46%, PAT UP 34%
Profit & Loss Statement – Q2FY19 NII Up 46%, PAT UP 34% (All Figures in INR Crore) Q2FY19 Q2FY18 Y-o-Y H1FY19 H1FY18 Y-o-Y Q1FY19 Unaudited Unaudited Unaudited Unaudited Unaudited Income Interest Earned 683 410 67% 1,284 771 66% 600 Interest Expended 362 191 90% 676 368 84% 314 Net Interest Income 3
Slide 11: Balance Sheet – Total Assets Doubled Over 1HFY18
Balance Sheet – Total Assets Doubled Over 1HFY18 (All Figures in INR Crore) Sept 30, 2018 Sept 30, 2017 Y-o-Y Jun 30, 2018 Unaudited Unaudited Unaudited Liabilities Capital 292 284 3% 290 Money received against Share Warrants 175 - N.A. 175 Employees stock options outstanding 34 9 277% 28 Reserves a
Slide 12: Marquee Shareholders Base – As on 30th Sep 2018
Marquee Shareholders Base – As on 30th Sep 2018 Shareholding Pattern Key Non-Promoter Shareholders (Holding above 1%) Holding Other - Redwood Investment (Warburg Pincus) 6.97% Domestic Individual - 4.9% Foreign Temasek Holdings 4.80% Domestic 10.3% Institutions (FC, FPI, FII) Nomura 4.67% 37.7% SBI
Slide 13: Way Forward – Focus on 4Ds as we Build The Bank
Way Forward – FOCUS On 4Ds as we Build The Bank Retail Assets, Small & Mid Corporate Assets Liabilities & Branch Banking Diversify Products Mix; Offering wider products bouquet BUILD Enhance customer experience through ongoing Digital Enhancements • Continue to be Retail Assets led bank • Scale up H
Slide 14: Retail Assets & Small & Mid-Corporate Assets - Snapshot
2. Retail Assets & Small & Mid- Corporate Assets - Snapshot 14
Slide 15: Retail and Small & Mid-Corporate Assets Snapshot – I
Retail and Small & Mid-Corporate Assets Snapshot – I Retail Assets comprise ~80% of Gross AUM of INR Retail Assets continues to exhibit strong growth 20,219 Crore INR Crore 1% 20,219 AUM Growth Y-o-Y Q-o-Q Retail Assets 17,747 19% 16,078 Total 65.6% 13.9% 12,209 14,248 Small & Mid- Corporate Assets
Slide 16: Retail and Small & Mid-Corporate Assets Snapshot – II
Retail and Small & Mid-Corporate Assets Snapshot – II Consistent growth in Disbursements Disbursement Yield INR Crore 7,004 14.5% Q2 Disbursement 14.8% 14.3% 5,027 Y-o-Y Q-o-Q Growth 4,110 4,032 14.0% Total 63.0% 42.4% 2,885 13.4% 2,520 2,751 2,942 13.2% 2,276 Retail 55.3% 20.9% 1,771 12.2% 1,976 74
Slide 17: Retail Assets Snapshot – I
Retail Assets Snapshot – I Retail Assets AUM Break-up AUM (INR Cr) Sep-18 Growth (%) Retail Assets 30-Sep-17 30-Jun-18 30-Sep-18 Y-o-Y Q-o-Q Wheels 5,786 7,710 8,543 47.6% 10.8% SBL - MSME 3,608 5,464 6,047 67.6% 10.7% SBL - SME 785 862 819 4.4% -4.9% GL + Agri SME+ HL+ CD 6 101 154 n.m. 52.5% OD Ag
Slide 18: Retail Assets Snapshot - II
Retail Assets Snapshot - II Strong Disbursement Momentum maintained in Retail Assets Retail Assets Disbursement IRR Disbursements (INR Cr) Q2FY19 Growth (%) 15.1% 14.7% 14.8% Retail Assets Q2FY18 Q1FY19 Q2FY19 Y-o-Y Q-o-Q 47.3% 14.7% 14.5% Wheels 1,056 1,358 1,555 14.5% 14.3% SBL (MSME & SME) 708 76
Slide 19: PVs – A Key Focus Segment within AU Wheels Book
PVs – A Key Focus Segment within AU Wheels Book Wheels AUM break up – New vs Old Wheels AUM break up – Vehicle types 1% 2% 3% Cars 3% 2% Multi-Utility Vehicle 5% 27% 27% Small Commercial Vehcile 3% Sports Utility Vehicle 6% Light Commercial Vehcile 9% Tractor 70% Heavy Commercial Vehcile Three Wheel
Slide 20: Scaling Up New Retail Foot Prints
Scaling Up New Retail Foot Prints Agriculture SME Loans Agri SME INR Crore IRR % Agri Enterprises Rolled out in 6 States Q2 Disbursement 57 11.3% Agri Infrastructure Focus on Agri Value Chain / AUM as on 30th 98 11.4% Agri Projects Food Processing, etc. Sep 18 GNPA as on 30th Sep 18 NIL Home Loans H
Slide 21: Small & Mid-Corporate Assets Snapshot
Small & Mid-Corporate Assets Snapshot Small & Mid-Corporate Assets AUM Break-up Good Momentum in Business Banking INR Crore 3,917 AUM Growth Y-o-Y Q-o-Q 15% 3,074 Small & Mid-Corporate 101.0% 27.4% 1,949 2,603 NBFC 155.0% 43.4% 19% 1,815 Gross AUM 68.1% 46.4% 1,018 Real Estate Group 2.7% -3.9% 66% 7
Slide 22: Small & Mid-Corporate Assets Snapshot
Small & Mid-Corporate Assets Snapshot Small & Mid Corporate Assets – Disbursement Break Up INR Crore 1,358 Q2FY19 Disbursement Growth Y-o-Y Q-o-Q 749 976 Small & Mid-Corporate 81.3% 123.1% 609 NBFC 95.9% 128.4% 498 427 102 Real Estate Group -4.6% 57.3% 107 65 280 Business Banking 94.7% 139.9% 144 11
Slide 23: Small & Mid-Corporate Assets Snapshot – II NBFC Lending
Small & Mid-Corporate Assets Snapshot – II NBFC Lending NBFC Lending spread across varied asset classes – substantially Asset Finance Co’s 88% of the NBFC exposure is in Investment Grade No. of No. of Type of NBFC’s Exposure (%) Credit Rating Exposure (%) Customers Customers Asset Finance Co's (AFC)
Slide 24: Business Banking - Non Fund Based Facilities Picking Up
Business Banking - Non Fund Based Facilities Picking Up 1. Started comprehensive Trade and FX Product Offerings Bank Letter of Bills under LC Letter of Import Inward Outward Import Bills Bill Discounting LC Advising Guarantee(BG) Credit(INR) (INR) Credit(FCY) Transaction Remittance Remittance 2. Exe
Slide 25: Liabilities & Branch Banking - Snapshot
3. Liabilities & Branch Banking - Snapshot 25
Slide 26: AU Branch Bankers - Driving Deposits, Cross-Sell, Third Party Products
AU Branch Bankers - Driving Deposits, Cross-Sell, Third Party Products, New Income Pools and Financial Inclusion Financial Inclusion Mobilizing Deposits ❖ >9K accounts opened in qtr. in unbanked areas ❖ Deposit base – ~8 lakh Accounts with INR 12,869 Crore Deposits; New to AU Bank - >80% ❖ Appointed
Slide 27: Liabilities - Branch Banking - Snapshot
Liabilities - Branch Banking - Snapshot Growing Deposit Franchise; CASA Ratio of 26% 43% of the Term Q-o-Q Growth Deposits are non- Current Account Saving Account Term Deposits* Total callable CASA RATIO (%) CASA RATIO (%) 10,798 CASA RATIO (%) 8,071 Growth 26% 7,997 28% Y-o-Y Q-o-Q 5,841 33% 550% 2
Slide 28: Branch Banking – Deposit profile
Branch Banking – Deposit profile 1 1 Area-wise Deposit Distribution Diversified Deposit Build-up across States Based on Deposit Amount 1% Rajasthan 13% 5% 1% Maharashtra 6% 27% Punjab 24% 7% 36% Himachal Pradesh Based on No. of Delhi Deposit A/c’s 8% 48% Haryana 39% Gujarat 40% 9% Madhya Pradesh 21%
Slide 29: Segment Wise - Key Initiatives
Segment Wise - Key Initiatives Individual / Retail Risen Rates for Retail Deposits up to 8.5% p.a. (50 bps extra for senior citizens) (Oct 8th 2018) ; Higher Rates in Saving Accounts Building Current Account Franchisee Increasing Thrust on CA – Put in place a separate specialist team; Rolled out
Slide 30: Treasury - Snapshot
AU SMALL FINANCE BANK 4. Treasury - Snapshot 30
Slide 31: Diversified Liabilities Portfolio
Diversified Liabilities Portfolio Increasing proportion of Deposits further diversifying the funding profile Funding Source 30-Sep-17 31-Dec-17 31-Mar-18 30-Jun-18 30-Sep-18 Deposits + Borrowings (INR Crore) 9,404 11,041 15,562 16,874 20,699 Deposits 21.0% 33.7% 50.9% 59.3% 62.2% Refinance from FIs
Slide 32: Declining Cost of Funds & Treasury Updates
Declining Cost of Funds & Treasury Updates Improving cost of funds1 Incremental Funds2 raised & its Cost INR Crore 12,000 11,568 8.0% 8.6% Avg. Cost of funds 7.3% 8.3% 7.1% 10,000 9,658 6.0% 7.9% 7.8% 8.0% 8,000 4.0% FY18 1HFY19 Incremental Funds Raised Incremental Cost of Funds Q2FY18 Q3FY18 Q4FY18
Slide 33: Strong Liquidity Position & Asset Liability Management
Strong Liquidity Position & Asset Liability Management Strong Liquidity Position Maintaining adequate liquidity cushion of more than 10% of Deposits & Borrowings (external liabilities) at all times Current Liquidity of INR 2,600 Crore along with available undrawn Bank Lines & Refinance of INR 75
Slide 34: Strong Liquidity Position & Asset Liability Management
Strong Liquidity Position & Asset Liability Management Low reliance on Certificate of Deposits Certificate of Deposits (CD) form less than 10% of external liabilities as on 30th Sep, 2018. CD outstanding of INR 2,071 Crore as on 30th Sep 2018 as against Board approved limit of INR 3,500 Crore Ac
Slide 35: Digital Bank
AU SMALL FINANCE BANK 5. Digital Bank 35
Slide 36: Digital Assets
Digital Assets Consumer Durable Online sourcing through Tech. Partner CD INR Crore IRR % Vijay Sales, Croma, Flipkart, Q2 Disbursement 4 23.0% Online/ Paperless Amazon, Samsung, Godrej etc. th AUM as on 30 Sep 18 5 23.9% App Assisted Model Offline Digitally Assisted Model at GNPA as on 30th Sep 18 1
Slide 37: About AU Small Finance Bank
6. About AU Small Finance Bank 37
Slide 38: AU BANK – tapping the unreached and unbanked segments
AU BANK – tapping the unreached and unbanked segments Overview Focused on Retail Financing with Diversified Portfolio • AU SMALL FINANCE BANK (“AU BANK” or “Company”) is a scheduled commercial bank Gross AUM of INR 20,219 crore which successfully transited from an Asset Financing NBFC to a SFB; star
Slide 39: Vision & Mission
Vision & Mission AU Vision AU Mission • To be the world’s most trusted retail bank and To build one of India’s largest retail franchise by 2022 coveted employer that is admired for: • That is admired as the epitome of financial • Making every customer feel supreme while being inclusion and economic
Slide 40: AU Journey - natural progression to Bank
AU Journey - natural progression to Bank FY96 to FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1HFY19 INR 1000 Crore Fund Manager Investment by Channel Partner Temasek Holdings NBFC – Asset Finance Company Small Finance Bank CA, SA, Deposits, Lockers, Payments & Onl
Slide 41: Product Offerings Liabilities Offerings
Diversified Bouquet of Products with focus on Retail Small & Mid-Corporate – Existing Retail Assets – Existing Products Products Secured Business Loans - Secured Business Loans – Parameter Wheels (Vehicle Loans) NBFC Real Estate Group MSME SME Commenced • 1996 • 2007 • 2012 • 2012 • 2012 • Traders,
Slide 42: Well entrenched contiguous distribution franchise addressing underserved customer segments
Well entrenched contiguous distribution franchise addressing underserved customer segments 395 Branches, 12,109 4,15,893 Active Loan 7,76,958 Deposit 11 States 292 ATMs 26% CASA Ratio1 88 Asset Centers employees Accounts Accounts Deep Penetration into Core States and Expansion into other States Targ
Slide 43: Customer Centricity
Customer Centricity Customer Centricity at the core of strong Asset franchisee Deep branch penetration & Hire Local Relationships with dealers & Call Centers Banking Ombudsman Personnel manufacturers • Ensures being close to the • Establish relationships and • 400+ Seater call center • 32 Banking om
Slide 44: Experienced Board of Directors
Experienced Board of Directors Board of Directors Mr. Mannil Venugopalan Ms. Jyoti Ishwar Chandra Mr. Raj Vikash Verma Mr. Krishan Kant Rathi Independent Director Chairman and Narang Independent Director 35+ years of experience Independent Director Independent Director 29+ years of experience Master
Slide 45: Historical Financial & Operational Performance
7. Historical Financial & Operational Performance 45
Slide 46: Robust Operating and Financial Performance (1/2)
Robust Operating and Financial Performance (1/2) Total Revenue and PAT Yields2 and Cost of Funds3 INR Crore NII + OI 4 7.8% 8.1% 9.1% 9.0% 9.4% 9.3% 7.6% 2155 17.9% 17.7% 17.5% 17.1% 16.5% 1509 14.7% 14.2% 1419 11.6% 11.2% 10.6% 1015 10.0% 9.6% 8.4% 738 7.8% 619 446 212 305 292 80 92 140 168 1 FY13
Slide 47: Robust Operating and Financial Performance (2/2)
Robust Operating and Financial Performance (2/2) Growth Trajectory Networth and Capital Infusion # of INR crore active 146,277 175,531 189,175 225,713 280,349 358,080 415,893 loan Infusion - 86 39 - 172 3 475 accounts 20,219 16,038 2,929 Gross AUM 2,281 10,734 Net Worth 1,988 (INR Crore) 8,221 (INR
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
THANK YOU Contact for Investor queries: Sunil Parnami / Hemant Sethia AU Small Finance Bank Ltd Tel: +91 22 6249 0607 / +91 22 6249 0614 Email: investorrelations@aubank.in 49
Slide 50: Abbreviations
Abbreviations ALM Asset Liability Management NPA Non Performing Assets AUM Asset Under Management NSE National Stock Exchange BSE Bombay Stock Exchange OPEX Operating Expenses CASA Current Account Deposits and Savings Account Deposit PAT Profit After Tax CRAR Capital Adequacy Ratio PPOP Pre-Provisio
AU Small Finance Bank — Q2 FY19 Earnings Presentation on 6ix