In the second quarter of fiscal year 2023-24, AU Small Finance Bank showcased amazing performance, reaffirming its resilience and commitment to customer-centric banking and digital advancements. The bank reported noteworthy growth in crucial operational metrics, encompassing deposits, advances, and net profit, underscoring its strong standing in the financial sector.
Exhibiting remarkable financial performance,the pre-provisioning operating profit (PPoP) for Q2’FY24 witnessed remarkable growth, surging 30% YoY to ₹648 Crore compared to ₹499 Crore in the same period last year. The bank’s net profit reached ₹402 Crore in Q2’FY24, demonstrating a significant YoY growth of 17% compared to ₹343 Crore in Q2’FY23. This solid profitability is indicative of AU Small Finance Bank’s effective strategies in a complex financial landscape.
Bank showcased impressive growth in deposits too. The total deposits crossed the ₹75,000 Crore mark, representing a remarkable YoY growth of 30% and a QoQ growth of 9% showing a tight liquidity environment which underscores its strong brand and customer confidence. CASA (Current Account and Savings Account) deposits increased by 4% YoY to ₹25,666 Crore, underscoring the bank’s commitment to fostering a strong deposit base. These deposits contribute to the bank’s stable and low-cost source of funding. Its customer base expanded, resulting in adding 3.65 lakh customers in Q2’FY24, with an impressive 45% acquisition through digital products and channels.
Bank’s gross advances recorded YoY growth of 24% in Q2’FY24, reaching ₹65,029 Crore. A closer look at the bank’s advance portfolio reveals that vehicle loans accounted for 32% of the total advances, while micro business loans (MBL), home loans, and commercial banking loans contributed 29%, 8%, and 23%, respectively. This diversified loan portfolio enhances the bank’s resilience in varying economic conditions. The gross non-performing assets (GNPA) percentage increased by just 1 basis point YoY, reaching 1.91%. Net non-performing assets (NNPA) stood at 0.60%, demonstrating the bank’s diligent efforts to manage credit risk prudently. The Provisioning Coverage Ratio (PCR) remained stable at 69%, with 73% including technical write-offs and floating provisions.
The bank facilitated over 90,000 service and engagement video calls in Q2’FY24, contributing to the opening of 3.7 lakh+ Current and Savings Accounts (CASA) and 2.3 lakh+ credit cards. The digital channel remains a significant driver of customer acquisition and engagement. Digital transactions via CASA customers consistently remained high at 98% in Q2’FY24, a testament to the bank’s customer-friendly digital solutions. Also,bank added 4 new touchpoints during the quarter, with plans to open over 50 additional touchpoints by year-end. This expansion strategy enhances the bank’s physical presence and accessibility for customers.
AU Small Finance Bank maintained strong credit ratings from major rating agencies, including CRISIL AA+/Stable for Fixed Deposit Program, CRISIL AA/Stable for Tier 2 Bonds, and CRISIL A1+ for the Certificate of Deposit Program. These high ratings reflect the bank’s financial strength and creditworthiness. The bank introduced “Green Fixed Deposits” named “Planet First” in support of renewable and green projects and to address climate change risks. This product is rated by CRISIL and complies with the RBI’s latest framework.
Commenting on the performance, Mr. Sanjay Agarwal, MD & CEO, AU Small Finance Bank said, “The global environment remains challenging with uncertainties around geo-politics, supply chain disruptions and inflation continuing to put persistent pressure on interest rates. The Indian economic environment looks strong and resilient and continues to provide a multitude of growth opportunities across various sectors. However, challenges around inflation, liquidity and disruptions in weather patterns remain, warranting caution as a lender and we remain watchful and responsive in caliberating our strategy……..”
AU Small Finance Bank received several awards, including “India’s Best Small Finance Bank 2021-22” by Financial Express Awards 2023, the “Award of Excellence” by PFRDA for achieving 100% target in Atal Pension Yojana (APY), and the “Most Impactful Women Employment Initiative of the Year” by Indian CSR Awards 2023 for its “AU Udyogini” initiative. These accolades acknowledge the bank’s commitment to inclusive growth and community development.
