Capitaline

Results 21-Jul-22

Analysis

AU Small Finance Bank

Strong loan growth and stable asset quality

AU Small Finance Bank has recorded strong 32% growth in the net profit to Rs 267.87 crore in the quarter ended June 2022 driven by strong 35% growth in the net interest income. The non-interest income of the bank has declined 26%, while the operating expenses surged 62% leading to 18% decline in the operating profit. However, the provisions have dipped 81%, supporting 30% jump in the PBT in the quarter ended June 2022.

Bank’s total balance sheet expanded 38% yoy to Rs 71041 crore. Deposits surged 48% yoy to Rs 54631 crore with sharp improvement in CASA ratio to 39% as against 26% a year ago. The bank has maintained stable cost of funds on qoq basis, while improved by 57 bps yoy to 5.7%. Net Interest Margin (NIM) at 5.9%. Incremental spreads remained stable at 6.9% as the increase in disbursement yields offset the increase in incremental borrowing cost

Loan AUM grew by 37% yoy to Rs 50161 crore with CD ratio at 89% end June 2022. About 90% of loan book is retail in nature and 94% is secured. In Q1FY23, fund-based disbursements were up 345% yoy at Rs 8445 crore as compared to Rs 1897 crore in the same quarter of the previous year which had a low base due to Covid 2.0. Non-fund disbursements for Q1FY23 were up 5x at Rs 481 crore as compared to Rs 79 crore in the same quarter of the previous year.

The Bank witnessed a growth of 37% yoy in its AUM to Rs 50161 crore from Rs 36635 crore. This was coupled with consistent collection efficiency of 105% for the quarter, resulting in sustained improvement in asset quality ratios.

Bank maintains a strong position in Digital services with properties like AU 0101, Video Banking, Credit cards, UPI QR etc. all of which continue to see strong momentum.

Bank added 34 new touchpoints taking its physical network to 953 touchpoints across 20 states and 2 Union Territories (UTs)

Bank continues to invest significantly in people, digital, branding, products and distribution to build a future ready bank.

RoA for Q1FY23 at 1.5% and RoE at 14.0%

Asset quality improved further as Gross NPA declined marginally to 1.96% QoQ and net NPA at 0.56%.

Collection efficiency averaged 105% for Q1FY23

Standard restructured assets declined to 2.1% from 2.5% sequentially

Provisioning Coverage Ratio (PCR) continues to remain north of 70%.

Additional provisioning in the form of Contingency provision of Rs 144 crore and Floating provision of Rs 41 crore.

The bank has launched LiT (Live it Today) Credit Card – India’s First customizable credit card which provides freedom to the customer to dynamically choose card benefits

Bank remains well capitalized with total CRAR at 19.4% against minimum requirement 15%. Adding the interim profits, CRAR would be 20.0%.

Tier-I capital ratio of 18.4% against minimum requirement 7.5%; adding the interim profits, Tier-I capital adequacy would be 19.1%

Book value of the bank stood at Rs 123.6 per share, while the adjusted book value (net of net NPA and 10% of restructured loans) stood at Rs 117.6 end June 2022.

Commenting on the performance, Sanjay Agarwal, MD & CEO, AU Small Finance Bank said, "I am very happy with the progress we have made as a Bank in the last 21 quarters despite working in an unusually challenging environment. Our business model is becoming increasingly sustainable with each passing quarter driven by our retail-focused branch banking franchise, well positioned asset verticals with consistently resilient asset quality, traction in our digital initiatives, and continued focus on high governance standards. I really want to thank our customers for servicing their obligations as their businesses normalized after the pandemic and wish them success in their endeavors.

Q1FY23 was one of the best Q1 for us in the last several years as we saw healthy performance across key parameters - improvement in CASA ratio and retail deposits mix, reduction in our GNPA ratio supported by collections remaining north of 100%, growth in each of the asset business, stable spreads and asset quality, and overall healthy profitability. We are expanding our distribution and continue to invest in digital initiatives, branding and distribution to capture the significant opportunities available to us and be future ready. We made our debut in north-east this quarter and have been getting good acceptance in the newer markets of South India and East India.

The macro-economic environment and geo-political challenges have kept inflation levels elevated and interest rates are hardening. While these impact costs, our endeavor remains on maintaining our return ratios. With good monsoon and expected support from festive season in second half of the year, we remain cautiously optimistic for the year as a whole”.

Financial Performance FY2022:

Bank has posted 3% decline in net profit to Rs 1129.83 crore in year ended March 2022 (FY2022). The net interest income increased 37% to Rs 3234.12 crore, while non-interest income dipped 30% to Rs 993.69 crore, pushing up net total income by 12% to Rs 4227.81 crore in FY2022. The operating expenses increased 45% to Rs 2412.77 crore, while provision and contingencies declined 46% to Rs 360.97 crore. PBT was flat at Rs 1454.07 crore in FY2022. The cost-to-income ratio increased to 57.1% in FY2022 compared to 43.8% in FY2021. An effective tax rate rose to 22.3% in FY2022 compared to 19.7% in FY2021. The net profit has declined 3% to Rs 1129.83 crore in FY2022.

AU Small Finance Bank : Standalone Results
Particulars	2206 (3)	2106 (3)	Var.(%)	2203 (12)	2103 (12)	Var.(%)
Int. Earned	1820.20	1353.49	34	5921.73	4950.05	20
Int. Exp.	844.20	629.48	34	2687.61	2584.61	4
Net Interest Income	976.00	724.01	35	3234.12	2365.44	37
Other Inc.	159.15	214.06	-26	993.69	1420.93	-30
Net Total income	1135.15	938.07	21	4227.81	3786.37	12
Operating expenses	741.08	456.95	62	2412.77	1658.43	45
Profit before provisions	394.07	481.12	-18	1815.04	2127.95	-15
Provisions & Contingencies	38.37	206.46	-81	360.97	669.44	-46
PBT	355.70	274.66	30	1454.07	1458.51	0
Taxation	87.83	71.46	23	324.24	287.82	13
Net profit	267.87	203.20	32	1129.83	1170.68	-3
EPS (Rs)*	17.0	12.9		17.9	18.6
* EPS is annualised on current equity of Rs 630.19 crore, Face value of Rs 10, Excluding extraordinary items.
Figures in Rs crore
Source: Capitaline Corporate Database

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