Au Small Finance Bank Limited · NSE:AUBANK
Au Small Finance Bank — Q1 FY24 Earnings Presentation
60 slides from Au Small Finance Bank's earnings presentation, Jul 22, 2023
Slide 1: Exchange filing cover letter
Ref. No.: AUSFB/SEC/2023-24/120 Date: July 22, 2023 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: Q1 FY24 Investor Presentation
BADLAAV Au FINANCE BANK PRESENTATION QVFY24 YEARS OF BUILDING TRUST Sustainable Business Model | Retail Focused | Tech-Led | Customer Centric | Well Governed
Slide 3: Agenda
Management Update Assets Update Operating & Financial Highlights Tech Update Liabilities Update Other Key Updates
Slide 4: 1. Management Update
1. Management Update Stable quarter with consistent performance Profitability remains resilient with RoA at 1.7% % and RoE at 13.8% for Q1’FY24 Focused on productivity and efficiency – No material increase in manpower in last 15 months Won “The Best Small Finance Bank of India” at Indian Chamber of
Slide 5: Key Messages
❑ Q1’FY24 saw gradual improvement in inflationary pressures amidst resilient macro-economic indicators. While domestic liquidity saw marginal improvement, the interest rates continued to remain elevated. Amidst this backdrop, Bank delivered consistent performance across business parameters leading t
Slide 6: Key Operating Highlights
❑ During Q1’FY24, our core performance remained resilient amidst a seasonally soft quarter - retail deposit mobilization, credit growth in all lending verticals, accelerated acquisition and engagement in digital products ❑ The quarter saw 29 bps increase in cost of funds with Q1’FY24 CoF at 6.58%; c
Slide 7: Q1'FY24 Financial performance snapshot
Q1’FY24 Financial performance snapshot ₹ 91,583 Cr Balance Sheet ❑ Deposits grew 27% YoY and remained flat QoQ; CASA ratio at 35%; CASA + Retail TD mix at 68% +29% YoY ❑ Gross advances grew 29% YoY and 8% QoQ; Bank did not securitize any loan during Q1’FY24 ₹ 69,315 Cr Deposits +27% YoY ❑ LCR reduce
Slide 8: Focus areas for FY24
Focus areas for FY24 NIM Profitability and ROA NIM is expected in the range of 5.5%-5.7% as deposits reprice Expected to be within last year’s range ▪ Margin impact has been front-loaded and should be gradual ahead ▪ Fee Income to grow with support from x-sell, Credit cards and third- ▪ Deposits hav
Slide 9: Our digital proposition is scaling well
Our digital proposition is scaling well AU 0101 Video Banking Credit Cards UPI QRs 21.6 Lacs 3.5 Lacs 6.1 Lacs 1 million+ Digital customers Digital Savings Accounts Live cards QR Codes installed 12.2 Lacs 1,310 Cr+ 69% 69% Monthly Active Users Total relationship value Cards issued to NTB QRs activat
Slide 10: Business model - deposits from Urban markets and lending in Core markets
Business model - deposits from Urban markets and lending in Core markets Deposits Break up Advances Break up 22% 37% (23%) (23%) (35%) 0.4% 0.4% Market Urban Core Market share share 78% 63% (77%) (65%) 2% 2% 2% 3% 1% 2% Rajasthan 1% 3% 1% 2% Maharashtra Delhi 5% 28% Punjab 16% 34% 7% Haryana Gujarat
Slide 11: Our geographical presence
Our geographical presence 21 States and 3 UTs 1,038 Touchpoints 241 Districts 722 Locations 495 ATMs Touchpoints Break-up J&K 2 HP 15 29% Punjab 52 Chandigarh 3 Uttarakhand 1 Haryana 52 Delhi 37 71% UP 19 Rajasthan Assam 1 401 (+3) Bihar 1 Urban Core MP 137 (+2) Jharkhand 1 AU Gujarat Asset West Ben
Slide 12: AD – I License operationalisation update
AD – I License operationalisation update Technology Have identified technology platform and started Core Banking enhancement Received Swift membership and undergoing tech integrations with Swift Customer front end solutions under development Appointed consulting and project management partners Produ
Slide 13: 2. Operating & Financial Highlights
2. Operating & Financial Highlights Calibrated growth in assets and liabilities with focus on operational efficiency For Q1’FY24, NII up 28% YoY & PPoP up by 39% YoY Q1’FY24 PAT grew by 44% YoY NIM for the quarter stands at 5.7% including securitised book
Slide 14: Q1'FY24 Financial highlights
Q1’FY24 Financial highlights ₹ in Crores Net Interest Income Total Income PAT 2,773 387 1,246 976 1,979 268 Q1'FY23 Q1'FY24 Q1'FY23 Q1'FY24 Q1'FY23 Q1'FY24 Yield on Advance Cost of Fund Net Interest Margin RoA RoE Vs Vs Vs Vs Vs 13.3% 5.7% 5.9% 1.5% 14.0% (Q1’FY23) (Q1’FY23) (Q1’FY23) (Q1’FY23) (Q1’
Slide 15: Quarterly trends of key parameters
Quarterly trends of key parameters Customers Employees Shareholders’ Funds Total B/S Assets (in Lacs) (in 000s) 41.3 11,379 91,583 35.7 38.6 29.9 10,114 10,540 10,977 90,216 28.7 28.3 28.4 33.3 27.8 77,878 80,703 30.7 71,041 7,789 Q1'FY24 Q1'FY23 Q3'FY23 Q1'FY23 Q2'FY23 Q4'FY23 Q1'FY24 Q3'FY23 Q1'FY
Slide 16: Quarterly trends of key parameters
Quarterly trends of key parameters ₹ in Crores Net Interest Income Total Income PAT Gross Advance Yield 2,773 425 13.3% 13.4% 13.4% 13.4% 1,213 1,246 393 387 13.3% 1,153 2,608 343 1,083 2,413 976 2,240 268 1,979 Q1'FY24 Q1'FY23 Q3'FY23 Q2'FY23 Q4'FY23 Q1'FY23 Q3'FY23 Q1'FY24 Q2'FY23 Q4'FY23 Q1'FY24
Slide 17: Profit & Loss statement
Profit & Loss statement (All Figures in ₹ Crore) Q1'FY24 Q1'FY23 YoY Q4'FY23 QoQ In Q1’FY24 : ❑ PPoP growth is robust at 39% YoY led by NII Income growth of 28% Interest Earned 2,458 1,820 35% 2,275 8% Interest Expended 1,212 844 44% 1,062 14% ❑ Other operating expenses have grown 46% YoY primarily
Slide 18: Balance sheet
Balance sheet (All Figures in ₹ Crore) 30th Jun'23 30th Jun'22 YoY 31st Mar’23 QoQ ❑ A stable and healthy balance sheet led by Liabilities ❑ Capital adequacy ratio of 21.5% Shareholders Fund 11,379 7,789 46% 10,977 4% Deposits 69,315 54,631 27% 69,365 0% ❑ Borrowings accounting for only 8% of Borrow
Slide 19: Other Income
Other Income (All Figures in ₹ Crore) Q1'FY24 Q1'FY23 YoY Q4'FY23 QoQ Loan Assets Processing & Other Fees 165 133 24% 182 -9% General Banking, Cross Sell & Deposits related fees 55 41 34% 71 -23% PSLC Fees 0 13 -100% 17 -100% Credit Card 55 17 232% 41 33% Miscellaneous 23 10 118% 21 10% Core Other I
Slide 20: Profitability ratios
Profitability ratios RoA Components NII (%) Other Income (%) Opex (%) Provision & Contingencies (%) 5.6% 5.5% 1.4% 4.5% 4.2% 0.9% 0.2% 0.1% Q1'FY23 Q1'FY24 Q1'FY23 Q1'FY24 Q1'FY23 Q1'FY24 Q1'FY23 Q1'FY24 RoA (%) RoE (%) Cost to Income (%) 1.7% 65.3% 65.0% 14.0% 13.8% 1.5% Q1'FY23 Q1'FY24 Q1'FY23 Q1'
Slide 21: 3. Liabilities Update
3. Liabilities Update CASA deposit grew 14% YoY, CASA ratio at 35%; CASA + Retail TD at 68% Retail TD grew 8% QoQ to ₹22,698 Cr % CD Ratio at 91% CoF for Q1’FY24 at 6.58%
Slide 22: How has the Branch Banking charter evolved in last 6 years?
How has the Branch Banking charter evolved in last 6 years? Structure Deposits Liability Branches* Consolidated Unit of Mar'18 7,923 7,923 41% 27% Mar'18 212 80 14 2017-18 Liabilities Garner deposits with customer mix ranging from Government, Co-operative Banks, Retail Customers etc Mar'20 12,989 13
Slide 23: Deposits snapshot
Deposits snapshot Focus on granular deposits and customer profiles ₹ in Crores Total Deposits 54,631 58,335 61,101 69,365 69,315 CD Book 1,224 588 546 631 684 TASC 5% 4% 4% 4% 4% 11% 9% 11% 10% 10% 3,680 3,240 Banks 11% 8% 11% 7% 10% 2,819 12% 13% 12% 14% 2,867 14% 2,211 Govt 22,980 21,046 20,652 Co
Slide 24: Building a Predictable, Scalable and Sustainable deposit franchise
Building a Predictable, Scalable and Sustainable deposit franchise Expanding Distribution ❑ Differentiated approach for Urban and Core markets o Branch expansion led by Urban Markets (+2 in Q1’FY24) ❑ Now a Pan India Bank with Presence in 21 states & 3 UT’s o From Jammu to Kochi & Mumbai to Assam ❑
Slide 25: 4. Asset Business Update
4. Asset Business Update Sustainable and Scalable business model; 89% retail loans & 91% loans are secured Restructured book reduced to 1.0% of Gross Advance GNPA ratio at 1.76%; NNPA at 0.55% PCR at 73% including technical write-off and floating provision
Slide 26: Strong and established asset franchise
Strong and established asset franchise ❑ Vintage book and tested business model ❑ Unique product proposition with ~ 15 years experience ❑ Growing opportunity in used and new vehicles especially in ❑ Strong collateral understanding core markets ❑ Deep penetration in core markets ❑ Deep penetration in
Slide 27: Asset book snapshot
Asset book snapshot ₹ in Crores Q1’FY24 Q1’FY23 Vintage Assigned/ Gross Assigned/ Segments Gross Gross Gross Gross (year) Securitised Advance Securitised Yield (%) Advances NPA NPA (%) Advances loans Yield (%) loans Wheels 1996 21,053 3,388 14.1% 466 2.2% 17,946 722 13.8% SBL (MSME) 2007 19,021 973
Slide 28: Provisioning Summary
Provisioning Summary Net credit loss (NCL) Q1’FY24 Q1’FY23 Q4’FY23 Repo & POS Loss 18 29 26 Write off 39 34 18 Less: Bad Debt Recovery* 8 2 6 Net Credit Loss 49 61 38 Net Credit Loss (as % of Avg. Total Assets) 0.22% 0.35% 0.18% Credit Cost - Net Impact on P&L Q1’FY24 Q1’FY23 Q4’FY23 Net Credit Loss
Slide 29: Overview of provisions
Overview of provisions ₹ in Crores Jun’23 Mar’23 Particulars Loan Loan Nos. Provisions Coverage Nos. Provisions Coverage Amount Amount GNPA 51,334 1,121 733 65% 45,904 981 695 71% Covid related restructuring (Standard) 7,091 605 100 17% 8,539 700 116 17% Contingency provisions 28 90 Floating provisi
Slide 30: 5. Tech Update
5. Tech Update 21.6 Lacs digital customers 45% customers acquired via digital products in Q1’FY24 6.1 Lacs live credit cards 1 Mn+ UPI QR codes installed
Slide 31: 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 30
Slide 32: Digital is accelerating our customer acquisition and increasing engagement
Digital is accelerating our customer acquisition and increasing engagement Accelerated acquisition through digital proposition… …at much lower cost AU 0101 launch 45 100 No. of customers (Lacs) 40 35 10 Lacs 30 Acquisition 25 <50 20 15 FY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 20 FY 21 FY 22 FY 23 F
Slide 33: AU 0101 – 5x growth since launch with 2 million+ Digital customers
AU 0101 – 5x growth since launch with 2 million+ Digital customers Tech Savvy Monthly Active Customer Base Digital Customers Customers Users Mar’23 38.6 Lacs 24.6 Lacs 19.0 Lacs 11.0 Lacs Jun‘23 41.3 Lacs 27.2 Lacs 21.6 Lacs 12.2 Lacs QoQ 7% 11% 14% 11% Consistently improving digital adoption ~5x di
Slide 34: 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 cross sell) ❑ Launched video KYC based digital corporate salary account ❑ Scaling up digital Cu
Slide 35: Credit Card - continues to scale with strong performance
Credit Card - continues to scale with strong performance across key metrics 6.1 Lacs 69% 24% ~₹ 1.6 Lacs Cards live Cards issued to NTB 1st time Credit Card users Average limit per card ❑ Average Monthly issuance of 42,000+ cards in Q1’FY24 ❑ Average Monthly spends of ₹ 1,150 Cr+ for Q1’FY24, highes
Slide 36: UPI QR - deepening our relationship with small merchants
UPI QR - deepening our relationship with small merchants Acquisition 1 Mn+ 69% 2.5 Lacs UPI QRs installed till Q1’FY24 Activation rate New customers acquired through UPI QR till Q1’FY24 ~1.9 Cr ~2.2 Lacs ₹ 1,712 Cr Transactions in Q1’FY24; Daily average Value of transactions in transactions in Jun‘2
Slide 37: Wealth - Building compelling value proposition for our deposit customers
Wealth – Building compelling value proposition for our deposit customers ❑ Established to build a long-term engagement with deposit customers ❑ Complementing & enhancing our existing HNI proposition meant for high value deposit customers ❑ Core team in place - Experienced talent across product, tech
Slide 38: 6. Other Key Updates
6. Other Key Updates Carbon Neutral AGM and Board Meeting for FY22 - 23 13,600+ Youth trained and 11.000+ employed 8,100 children benefitted through AU Bano champion 340+ Financial Literacy camp organised in Q1’FY24
Slide 39: ESG focus areas
ESG focus areas GRI & BRSR Capability Report Climate Action Green Finance Building Strengthening Sustainability Disclosures ESG Data Policy Infrastructure Dedicated Strengthening Carbon Training Module Disclosure Green for Employees Program Financing ESG Platforms Policy & Sustainability Framework R
Slide 40: ESG updates
ESG updates Carbon Neutral AGM & Board Meetings FY23 Accounting Project Selection CO2 Retirement Project - 27 MWP Solar Calculation Neutralized by retiring PV Project by MH carbon credits Methodology - DEFRA Technique Solaire India Total 32 Ton of CO2 was Carbon Offset Platform - GSF Registry emitte
Slide 41: CSR initiative @ AU
CSR initiative @ AU Flagship Strategic Other Initiatives AU Ignite Bano Champion AU Udyogini (Skills Development) (Rural Sports) (Women Entrepreneurship) AU Jal Bank 2,187 13,628 62 Women engaged Education & Awareness Youth Trained Locations Supporting community schools and awareness campaigns 538 1
Slide 42: Financial & digital inclusion
Financial & digital inclusion Universal Access to Financial Services ➢ 31% of our total touchpoints/branches - 320 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 91 touchpoints covering 23 Aspira
Slide 43: Awards and recognition – Q1'FY24
Awards and recognition – Q1’FY24 Masters of Risk in Risk Technology In Large-Cap Category India Risk Management Awards 2023 By Marksmen Daily The Best Small Finance Bank of India Best Customer Centric & Culture in the Bank Best Performance in Risk Management At Smart CX Summit & Awards By “ICC Emerg
Slide 44: About AU
About us About AU Liabilities Update Other Key Updates
Slide 45: AU's Journey
AU’s Journey Started Expanded Equity Received Launched Received AD- I operations operations investment SFB Digital Bank, License from from Jaipur as to from IFC License Video Banking RBI Vehicle Maharashtra from RBI Credit Cards Financing Started Housing Finance Co in Equity Capital 2003 2008 2011 2
Slide 46: Consistent performance for 6 years
Consistent performance for 6 years Touchpoints Employees Customers (in Lacs) 17% 20% 1,027 39% 38.6 919 27,817 28,320 744 22,484 27.5 647 558 17,112 20.2 474 12,623 17.2 11,151 12.3 7.5 FY18 FY19 FY20 FY21 FY22 FY23 FY18 FY19 FY20 FY21 FY22 FY23 FY18 FY19 FY20 FY21 FY22 FY23 ₹ in Crores Deposit Gros
Slide 47: Consistent performance for 6 years
Consistent performance for 6 years ₹ in Crores Net Interest Income PAT Shareholders Fund 37% 37% 36% 4,425 1,428 10,977 1,130 3,234 7,514 2,365 6,275 1,909 596 600 # 1,343 382 4,377 940 292 3,163 2,281 FY18 FY19 FY20 FY21 FY22 FY23 FY18 FY19 FY20 * FY21 * FY22 FY23 FY18 FY19 FY20 FY21 FY22 FY23 RoA
Slide 48: Asset quality for 6 years
Asset quality for 6 years ₹ in Crores Particulars FY18 FY19 FY20 FY21 FY22 FY23 Q1’FY24 Gross Advances 13,413 22,994 27,233 35,356 46,789 59,158 63,635 Gross NPA 270 470 458 1,503 924 981 1,121 NPA Provision (incl. floating 100 176 240 747 694 736 774 provision) Net NPA 169 295 217 755 231 245 347 G
Slide 49: Impact stories – click to listen
Impact stories – click to listen 48
Slide 50: AU's customer testimonies
AU’s customer testimonies 49
Slide 51: Learnings from last 6 years
Learnings from last 6 years Madness to Method Borrower to Customer KYC to UYC Quantity to Quality Unified Market to Differentiated approach for Core and Urban Transactional approach to Generational orientation Consistently challenging the status quo to improve customer and employee experience 50
Slide 52: Building a sustainable forever Bank
Building a sustainable forever Bank ❑ Navigated 6 years ❑ Focus on our 7 Strategic ❑ Built a Forever bank with successfully despite Priorities to deliver sustainability at its core multiple headwinds consistent outcomes ❑ Agile Bank keeping ❑ Committed to our Inclusive ❑ Complete platform build- Cus
Slide 53: 7 strategic priorities
7 strategic priorities Scale retail focused, Drive Sustainable growth Build a Tech- Strong risk sustainable, low-cost deposit from existing asset led ecosystem management & franchise products & segments controls Develop a highly Create strong Strengthen our empowered and capable brand identity ESG c
Slide 54: 10 SBUs to execute the strategy
10 SBUs to execute the strategy ❑ Successfully implemented the SBU structure, that has played a pivotal role in attracting talent, fostering leadership development, and promoting cohesive and motivated teams, facilitating an effective succession planning. ❑ Each BU has o Its own vertical structure,
Slide 55: Shareholding pattern
Shareholding pattern KMP, Director & their relatives (Excluding Others Independent Director) Promoter & Promoter Group 2.0% 3.7% Individuals 25.5% 7.6% Foreign holding 42% Domestic holding 58% Mutual Fund 10.3% Foreign Holding 41.9% AIF 5.7% Insurance 3.3% As on 30th Jun’23 54
Slide 56: Board of Directors
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 Held leadership positions at IMGC, CERSAI, PFRDA, etc. Independent Directors Executive Directors Mr. Kamlesh Vikamsey Ms. Kavita Venugopal Mr. S
Slide 57: Abbreviations
Abbreviations BSBDA Basic Savings Bank Deposit A/C OPEX Operating Expenses CASA Current Account Deposits and Savings Account Deposit P&L Profit & Loss Statement CoF Cost of Fund PAT Profit After Tax CRAR Capital Adequacy Ratio PMJJBY Pradhan Mantri Jeevan Jyoti Bima Yojana DII Domestic Institutional
Slide 58: 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 59: 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 60: THANK YOU
THANK YOU For Investor queries contact (details in QR Code): Prince Tiwari Email: investorrelations@aubank.in
AU Small Finance Bank — Q1 FY24 Earnings Presentation on 6ix