Jaipur, January 28, 2021: The Board of Directors of AU Small Finance Bank Limited at its meeting held today, approved the unaudited financial results for quarter ended December 31, 2020.
Performance Highlight
Ø Strengthened Digital Banking channels – rolled out new age Mobile Banking/Internet Banking, traction across payment channels, launched credit cards internally for Bank employees
Ø Disbursements growth at 34% YoY in Q3FY21 driven by growth in demand across most key segments
Ø AUM at ₹ 33,222 Cr with growth of 11% YoY, ~9% QoQ; Retail AUM remains dominant at ~91%
Ø Gross NPA at 1.0% and Net NPA at 0.2%; PCR at 76%
Ø PAT ₹ 1,002 Cr for 9MFY21 and ₹ 479 Cr for Q3FY21
Ø ROA for 9MFY21 was 3.0% and for Q3FY21 it was 4.2%; ROE was at 27.3% for 9MFY21 and 37.1% for Q3FY21
Ø CRAR at 18.8%; Including 9M interim profits, CRAR at 22.9%
Ø Basis the normalized environment and re-emergence of growth, the Bank is moving ahead with annual performance appraisal (increments) for FY20 for all employees in this quarter; the bonus has already been paid out in Q3FY21
Update on Operating Environment
Ø Overall sentiment continues to improve with high COVID recovery rates, declining number of new COVID cases, and commencement of vaccination
Ø Demand has normalized in most segments in Q3FY21; Q4FY21 is expected to be significantly better
Ø Disproportionately impacted segments still lagging – Bus and Taxi segment in Wheels; Schools, Retail Garments and Rentals in SBL; Demand reviving with the improving operating environment
Ø Pending clarity on NPL recognition should help accelerate recovery process as it would ease security enforcement
Ø Bank is actively engaging with customers facing genuine stress due to COVID; continues to exercise caution in restructuring
Business Outlook
Ø Overall sentiment continues to improve with high recovery rates, declining number of new cases, and commencement of vaccination
Ø Demand has normalized in most segments in Q3FY21; Q4FY21 is expected to be significantly better
Ø Disproportionately impacted segments still lagging – Bus and Taxi segment in Wheels; Schools, Retail Garments and Rentals in SBL; Demand reviving with the improving operating environment
Ø Pending clarity on NPL recognition should help accelerate recovery process as it would ease security enforcement
Ø Bank is actively engaging with customers facing genuine stress due to COVID; continues to exercise caution in restructuring
Branch Banking – Building a sustainable granular franchise
Ø Continued traction in retailization of deposits and deepening of customers – Individual Driven Banking contributes ~60% of branch deposits as on Q3FY21 vs. 36% in Q3FY20
Ø 28% YoY growth in branch banking deposits led by SA growth of 85% and CA growth of 35%
Ø Retail deposits (CASA + Retail TD) now at 55% of deposits vs 43% in Q3FY20; CASA ratio at 22% vs. 16% in Q3FY20
Ø Gaining Market Share 41 branches now above 5% market share in deposits; 8 branches >10% market share
Ø Added Branch footprint in 16 new locations including Bhubaneshwar, Hyderabad, Kolkata and Lucknow
Ø Attractive Merchant Offers with larger partners like Amazon, Flipkart, Myntra, Swiggy, Zomato, Dominos, etc. leading to higher customer engagement and balances build up
Ø Enhanced our 3rd party product range – Entered into partnerships with Care Health Insurance, ICICI Prudential Life Insurance
Ø CRISIL awarded “FAA+/Stable” rating to AU Bank’s Fixed Deposits in Q3FY21
Assets – Promising outlook
Ø Demand has been consistently improving and becoming more broad-based with pick-up in activity levels
Ø AUM spreads remained stable at 7.6%; Incremental spreads improved to 8.1% in Q3FY21 vs 8.0% in Q3FY20
Ø Collection efficiencies and activation rates have achieved normalcy across most segments
Ø The Bank has been prudent in approving restructuring proposals basis our internal risk models and business viability; most of the restructuring has been for deferment of principal by 3/6 months while servicing of interest continues
Ø In Q3FY21, the Bank restructured ₹ 251Cr (0.8% of gross advances), mainly in the bus, taxi (within wheels) and schools, apparels (within SBL); Overall restructured advances should stabilize at ~1.5% of gross advances including fresh restructuring that the Bank may undertake in Q4FY21
Digital Banking – Moving towards a Digital-led Bank
Ø Remain actively engaged in mutually beneficial partnerships with major e-commerce players via offer campaigns;
Ø National level E-Com players are more open to engage with us given our tech capabilities in API banking and our diverse customer base.
Ø New platforms launched
o New Internet and Mobile Banking platform launched for retail customers – 100+ features incl. ASBA, UPI, Investments, Bill Payments and various lifestyle related services like Taxi booking, Flight tickets, Hotels etc.
o Credit card on our own platform with best-in-class partners; live for employees; customer launch in next few months
Ø Digital payment Ecosystem – all channels live (UPI, FASTag, BBPS, AePS etc.);
§ Over 1.6Cr txns worth ~₹ 6,000 Crores executed in Q3FY21 on UPI platform
§ ₹ 172 Crores worth of payments executed in Q3FY21 using AePS platform
Ø QR ecosystem continues to expand - ~28K new merchant QR Codes deployed in Q3FY21 – to boost CA acquisition, analytics-based lending
Ø Digital on-boarding – Video Banking solution live for KYC, SA and FD A/c opening modules live
o ~1,000+ SA and FD a/c opened in Q3FY21 using Video Banking
o ~4,400 SA a/c opened via AU ABHI (end-to-end self-onboarding application of the Bank)
o ~87% of all SA a/c and 60% of all CA a/c opened during the quarter were opened using digital solution via TAB banking
Ø High emphasis on internal digitisation and automation of processes across verticals – optimise productivity and TAT
Ø Investment in NPCI – to further augment our digital banking journey, AU Bank also participated in the equity raising process of NPCI to the maximum permissible limit
Update on Treasury
Ø Overall cost of funds for 9MFY21 was at 6.95% - reduced by 74bps over FY20; Incremental cost for 9MFY21 was at 5.97% - down by 136 bps over FY20
Ø Basis overall market environment, we have focused on maintaining optimum liquidity - LCR has been brought down in a calibrated manner from 150% as on 30th June’20 to 111% as on 31st Dec’20 (against regulatory requirement of 90%)
Ø CD ratio as at 31st Dec 2020 was 102% vs 111% as on 31st Dec 2019; Average CD ratio for 9MFY21 at 101%
Commenting on the performance, Mr. Sanjay Agarwal, MD & CEO, AU Small Finance Bank said,
“I believe the worst is behind us, things are going to get better now with the public vaccination in horizon. We as a Bank stood strong in the last 9 months and have performed well enough on all metrics such as Deposit Growth, Liquidity, Asset Quality, Digital Banking, Inclusive Banking, Customer Engagement and Employee Safety & well-being. The accelerated growth of technology adoption has enabled us to offer seamless customer experience. We are working on various digital properties to create a holistic digital Bank. We have a positive outlook towards the growth of our economy, we believe we will grow with it as well.”
Key Financials:
(All figures in INR Crore) | 31-Dec-20 | 31-Dec-19 | Y-o-Y | 30-Sep-20 | Q-o-Q |
Net Worth | 5,403 | 4,237 | 28% | 4,916 | 10% |
Total Assets | 46,605 | 38,394 | 21% | 44,014 | 6% |
Deposits | 29,708 | 23,865 | 24% | 26,980 | 10% |
Advances | 30,293 | 26,572 | 14% | 27,233 | 11% |
Key Ratios
31-Dec-20 | 30-Sep-20 | 31-Dec-19 | |
Gross NPA (%) | 1.0% | 1.5% | 1.9% |
Net NPA (%) | 0.2% | 0.5% | 1.0% |
Capital Adequacy Ratio (%) CRAR | 18.8% | 21.5% | 19.3% |
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