AU SFB Q1 FY25: Profit Up 30% to ₹503 Cr, NII Grows 54% YoY

Mumbai/ Jaipur 26th July 2024: The Board of Directors of AU Small Finance Bank Limited at its meeting held today, approved the financial results for the quarter ended June 30, 2024.

Executive Summary

Q1’FY25 saw continued elevated competition among banks for deposit mobilization, while liquidity remained in deficit for most part of the quarter and inflation was rangebound. Domestic growth and inflation dynamics are expected to keep the interest rates elevated for longer.

Quarter 1 has seasonally been a weak quarter which got further impacted due to some break in continuity due to general elections and a strong heat wave in some parts of the country. Despite these challenges, Bank in this quarter delivered a consistent performance across business parameters with a steady start to the financial year. Bank has also made noticeable progress on various parameters highlighted in the AU@2027 strategy.

Performance at a glance:

Profitability

• The Bank’s Net Interest Income (NII) grew 54% YoY to ₹1,921 Crore compared to ₹1,246 Crore during Q1’FY24
• Other Income growth for Q1’FY25 grew by 73% YoY to ₹546 Crore, driven by fee income, third-party product distribution and credit cards
• The Bank’s pre-provisioning operating profit (PPoP) for Q1’FY25 grew 81% YoY to ₹ 988 Crore compared to ₹546 Crore in Q1’FY24.
• The net profit at ₹503 Crore in Q1’FY25 grew 30% YoY compared to ₹ 387 Crore in Q1’FY24
• Net Interest Margin (NIM) for Q1’FY25 stood at 6.0%
•  Cost to Income declined by 509 bps YoY to 59.9% in Q1’FY25
• The Return on Asset (ROA) and Return on Equity (ROE) stood at 1.6% and 13.2% respectively

Deposits

• Bank Deposits stood at ₹97,290 Cr compared to ₹97,704 Cr as on 31st Mar 2024 on a proforma basis and ₹69,315 Cr as on 30th June 2023
•  Bank decided to utilize excess liquidity built up in the previous quarter (QoQ growth was 9% in Q4FY24).
• Bank focused on growing retail deposits while retiring high-cost deposits. This led to 7 bps reduction in CoF in Q1’FY25 from proforma merged CoF in Q4’FY24
•  CASA deposits grew by 2% sequentially to ₹32,035 Cr with CASA ratio at 33%
• CASA + Retail TD as on 30th Jun’24 stands at 70%
• The current account deposits increased by 46% YoY in Q1’FY25 and savings account deposits saw an increase of 30% YoY
• ·The Bank had a Liquidity Coverage Ratio (LCR) of 117% for Q1’FY25
• In April’24, Bank reduced interest rates in certain buckets of savings deposits by up to 100bps keeping peak savings deposit rate at 7.25%

Advances

• Advances growth remained strong with Loan portfolio at ₹99,792 Cr, growing by 3.4% QoQ on proforma merged basis
• Incremental spreads increased from 5.8% in Q4’FY24 to 8.7% in Q1’FY25, supported by higher disbursement yields across asset classes and addition of high yielding microfinance assets
• The Gross advances yield at 14.4%, increased 3 bps QoQ on proforma merged book
• Bank securitized loans/ Issued IBPC certificates worth ₹725 Cr during Q1’FY25 taking the Bank’s total securitized/ IBPC book to ₹9,089 Cr

Asset Quality

• GNPA increased by 12 bps to 1.78% and NNPA increased by 7bps to 0.63% as against GNPA of 1.66% and NNPA of 0.56% as on 31st March’24 on proforma merged basis
• There are no specific pockets of stress or any EWS in the portfolio
• Provision coverage ratio stood at 84% including technical write off and floating provision after creating 17 Cr of contingency buffer for microfinance portfolio

Distribution

• We are now present in 21 states and 4 UTs with 2,414 physical touchpoints
• We now cater to 108 Lac+ customers with a total strength of 46k+ employees

Credit Rating

• AA+/ Stable for Fixed deposit program by CRISIL
• AA/ Stable for Tier 2 Bonds by CRISIL, ICRA, India Ratings and CARE
• A1+ for certificate of deposit program by CRISIL, India Ratings and CARE

New Credit Card Launches:

NOMO credit card – Empowering new-to-credit & individuals with limited bureau history by providing FD based Secured Credit Card & expanding reach in Tier 2 & 3 cities

SPONT Credit Card – A RuPay Card designed to capture small ticket transactions leveraging existing UPI/ QR infrastructure with unique value proposition to reward customers on UPI transactions

Aditya Birla Finance Ltd Co-brand launch – Partnership to drive acquisition on Aditya Birla Finance customer base & strengthen our co-brand distribution & Branch cognizance

Commenting on the performance, Mr. Sanjay Agarwal, MD & CEO, AU Small Finance Bank said, “India’s economy continued to show robust growth in the first quarter of the current fiscal year. This was driven by strong private consumption and government spending, particularly in infrastructure. Overall, the Indian economy displayed resilience and outperformed many of its peers.

Amidst this macro backdrop, AU SFB delivered another quarter of consistent performance across parameters with sustainable growth in our assets, disbursement yields and profitability. Our team’s dedication and our customer-centric approach have contributed to our positive performance this quarter. I am excited that the board has given approval for making our application to the RBI, for transitioning to a universal bank, opening new avenues for our growth and expansion.