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AU Small Finance Bank has reported 38% growth in net profit at Rs 168.98 crore for the quarter ended March 2021. The bank has posted healthy 18% growth in net interest income (NII), while the non-interest income of the bank also improved 51% in Q4FY2021. The Net Interest Margin (NIM) of the bank eased to 5.30% in Q4FY2021 compared to 5.50% in the corresponding quarter of previous year. On business front, the loan book of the bank has surged 22% to Rs 37712 crore end March 2021, while the CASA ratio of the bank has moved up to 23.0% at end March 2021.
Asset quality weakens: The bank has witnessed deterioration in the asset quality in Q4FY2021.
The fresh slippages of loans surged to Rs 1244 crore in Q4FY2021, while the recovery, upgradations and write-off together were negligible at Rs 44 crore.
GNPA increased to 4.3% end March 2021 from 3.7% end December 2020, of which an increase of 1.5% is driven by pool of customers who are <90 dpd and paying but were Once NPA and have been tagged as NPA due to Supreme Court vacating the stay on NPA tagging. The bank expects majority of these NPAs to regularize.
Excluding these NPAs, 90+ dpd NPAs reduced to 2.7% end March 2021 from 3.3% end December 2020.
The collection efficiency was more than 100% in each month of Q4FY2021.
Restructured loans stood at Rs 641 crore (1.8% of Gross Advances, vehicles and small business loans constitutes 90%).
The Provision Coverage ratio stood at 50.0% at end March 2021.
| Asset Quality Indicators: AU Small Finance Bank |
|
Mar-21 |
Dec-20 |
Sep-20 |
Jun-20 |
Mar-20 |
Variation |
| QoQ |
YoY |
| Gross NPA (Rs Crore) |
1502.83 |
302.74 |
423.17 |
447.12 |
457.78 |
396 |
228 |
| Net NPA (Rs Crore) |
755.45 |
72.69 |
122.83 |
163.19 |
217.30 |
939 |
248 |
| % Gross NPA |
4.25 |
0.99 |
1.54 |
1.69 |
1.68 |
326 |
257 |
| % Net NPA |
2.18 |
0.24 |
0.45 |
0.62 |
0.81 |
194 |
137 |
| % Provision Coverage Ratio |
50.00 |
76.00 |
71.10 |
63.70 |
52.50 |
-2600 |
-250 |
| % CRAR - Basel III |
23.37 |
18.84 |
21.47 |
21.72 |
21.99 |
453 |
138 |
| Tier I - Basel III % |
21.50 |
16.30 |
18.30 |
18.50 |
18.40 |
520 |
310 |
| Variation in basis points for figures given in percentages and in % for figures in Rs crore |
Business Highlights:
Healthy business growth: The total assets of the bank have surged 22% YoY to Rs 51591 crore end March 2021. The advances surged 22% surge in advances to Rs 37712 crore. Deposits zoomed to Rs 35979 crore end March 2021 from Rs 26164 crore end December 2019.
Disbursements were flat at Rs 17590 crore in FY2021 over FY2020, while the disbursement have jumped sharply by 47% in the second half of FY2021 with a strong rebound in disbursement in vehicle, small business loans and housing segment. Retail assets are 91% of AUM.
Deposits continue to scale driven by increasing brand awareness branch expansion and improved digital offering. The bank has sharply improved its CASA deposit ratio from 14% end March 2020 to 23%.
Margins eases: The bank has showed sharp 90 bps YoY decline in cost of funds to 6.80%, while yield on fund declined 60 bps YoY to 14.10% in Q4FY2021. Thus, the NIM has improved 20 bps YoY to 5.30%.
Branch expansion: The bank has network of 729 branches and 343 ATM's, serviced through 22484 employees base end March 2021.
Book value of the bank stood at Rs 197.7 per share at end March 2021, while the adjusted book value (net of NNPA and 10% of restructured advances) was Rs 171.4 per share at end March 2021.
Quarterly Performance
NII surges on strong loan growth: Bank has recorded 9% increase in the interest earned at Rs 1292.37 crore, while interest expenses rose 1% to Rs 636.54 crore in Q4FY2021. NII improved 18% to Rs 655.83 crore in the quarter ended March 2021.
NII in Q4 impacted due to interest reversals of Rs 66 crore on account of NPA tagging of borrower accounts in compliance with RBI circular of 7 April 2021. The Bank had made Rs 38 crore of provisions against these reversals which were utilized during the quarter.
Healthy growth in the non-interest income: Bank has posted strong 51% growth in non-interest income to Rs 277 crore in the quarter ended March 2021.
Stable expenses ratio: The operating expenses of the bank increased 32% to Rs 558.67 crore, as other expenses moved up 2% to Rs 221.84 crore, while employee expenses fell 65% to Rs 336.83 crore in Q4FY2021.
Cost to income ratio was nearly stable at 59.9% in Q4FY2021 compared with 57.2% in Q4FY2020, allowing the Operating Profit to increase 18% to Rs 373.81 crore.
Provisions and contingencies rises: The bank has showed 18% increase in provisions to Rs 177.78 crore. NPA provisions declined 10240% to Rs 517.00 crore, while Repossession Loss Rs 11.00 crore.
Effective tax rate declined to 13.8% in Q4FY2021 from 26.0% in Q4FY2020. Net Profit rose by 38% YoY to Rs 168.98 crore during quarter ended March 2021.
Financial Performance FY2021:
Bank has posted 73% increase in net profit to Rs 1170.69 crore in nine months ended March 2021 (FY2021). The net interest income increased 24% to Rs 2365.44 crore, while non-interest income moved up 106% to Rs 1451.55 crore, pushing up net total income by 46% to Rs 3816.99 crore in FY2021. The operating expenses increased 17% to Rs 1658.42 crore, while provision and contingencies galloped 147% to Rs 700.06 crore, allowing profit before tax to increase 60% to Rs 1458.51 crore in FY2021. The cost-to-income ratio improved to 43.4% in FY2021 compared to 54.2% in FY2020. An effective tax rate declined to 19.7% in FY2021 compared to 26.2% in FY2020. The net profit has increased 73% to Rs 1170.69 crore in FY2021.
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