AU Small Finance Bank

Maintains strong performance

Oct 22, 2019 11:10 IST capital market

Au Small Finance Bank has reported 88% growth in net profit at Rs 171.94 crore for the quarter ended September 2019. The bank has posted healthy 41% growth in net interest income (NII), while the non-interest income of the bank also improved 23% in Q2FY2020. The Net Interest Margin (NIM) of the bank eased to 5.30% in Q2FY2020 compared to 5.60% in the corresponding quarter of previous year.

On business front, the loan book of the bank has surged 38% to Rs 27876 crore end September 2019, while the bank has improved asset quality in Q2FY2020. However, the CASA ratio of the bank has dipped to 16.0% at end September 2019.

Asset quality improves: The bank has improved asset quality in Q2FY2020 driven by strong loan growth and stable fresh slippages of loans.

  • The fresh slippages of loans stood at Rs 142 crore in Q2FY2020, while the recovery, upgradations and write-off together were healthy at Rs 124 crore.
  • The Provision Coverage ratio increased 43.9% at end September 2019.
  • The risk weighted assets of the bank have increased 31% to Rs 20310 crore end September 2019.
Asset Quality Indicators: AU Small Finance Bank
Sep-19 Jun-19 Mar-19 Dec-18 Sep-18 Variation
QoQ YTD YoY
Gross NPA (Rs Crore) 503.84 485.70 470.14 420.73 371.04 4 7 36
Net NPA (Rs Crore) 282.85 289.00 294.50 262.65 231.56 -2 -4 22
% Gross NPA 2.01 2.08 2.04 2.09 2.03 -7 -3 -2
% Net NPA 1.14 1.25 1.29 1.31 1.28 -11 -15 -14
% Provision Coverage Ratio 43.90 40.50 37.40 37.60 37.60 340 650 630
% CRAR - Basel III 17.90 18.60 19.30 19.00 17.80 -70 -140 10
Tier I - Basel III % 14.90 15.50 16.00 15.50 17.20 -60 -110 -230
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 45% YoY to Rs 35826 crore end September 2019. The advances surged 38% to Rs 27876 crore. Deposits and borrowings galloped 48% to Rs 30732 crore at end September 2019. Deposits zoomed to Rs 22149 crore end September 2019 from Rs 12869 crore end September 2018.

Strong loan growth: Advances growth was driven by retail loans rising 44% YoY to Rs 22047 crore at end September 2019, while small and mid corporate loans have moved up 14% to Rs 5304 crore at end September 2019.

Margins improve on sequential basis: The bank has exhibited stable cost of funds at 7.80%, while yield on fund rose 40 bps YoY to 14.70% in Q2FY2020. NIM has improved on sequential basis to 5.30%.

Branch expansion: The bank has network of 428 branches and 565 ATMs, serviced through 14189 employees base end September 2019.

Book value of the bank stood at Rs 118.0 per share at end September 2019, while the adjusted book value (net of NNPA) was Rs 108.4 per share at end September 2019.

Quarterly Performance

NII surges on strong loan growth: Bank has recorded 51% increase in the interest earned at Rs 1033.43 crore, while interest expenses jumped 61% to Rs 581.84 crore in Q2FY2020. NII improved 41% to Rs 451.59 crore in the quarter ended September 2019.

Healthy growth in the non-interest income: Bank has posted strong 23% growth in non-interest income to Rs 151 crore in the quarter ended September 2019. The income from sale of MF & other assets surged 600% to Rs 28 crore, followed by loan assets processing & other fees rising 40% to Rs 81 crore and general banking & deposits related fees 36% to Rs 15 crore. However, the PSLC premium / fees declined 23% to Rs 10 crore and bad debt recovery dipped 40% to Rs 6 crore, while cross sell, distribution related fees & others also declined 61% to Rs 11 crore in Q2FY2020.

Expenses ratio declines: The operating expenses of the bank increased 21% to Rs 324.68 crore, as other expenses moved up 20% to Rs 142.55 crore, while employee expenses also increased 22% to Rs 182.13 crore in Q2FY2020. Cost to income ratio declined to 53.9% in Q2FY2020 compared with 60.5% in Q2FY2019, allowing the Operating Profit to increase 59% to Rs 277.70 crore.

Provisions and contingencies rises: The bank has showed 74% increase in provisions to Rs 61.01 crore. NPA provisions increased 41% to Rs 24 crore, while repossession loss stood at Rs 7 crore.

Effective tax rate declined to 20.7% in Q2FY2020 from 34.8% in Q2FY2019. Net Profit rose by 88% YoY to Rs 171.94 crore during quarter ended September 2019.

Half Yearly Financial Performance:

Bank has posted 115% increase in net profit to Rs 362.26 crore in half year ended September 2019 (H1FY2020). The net interest income increased 39% to Rs 847.17 crore, while non-interest income moved up 60% to Rs 361.73 crore, pushing up net total income by 45% to Rs 1208.90 crore in H1FY2020. The operating expenses increased 27% to Rs 640.36 crore, while provision and contingencies galloped 32% to Rs 92.52 crore, allowing profit before tax to increase 85% to Rs 476.01 crore in H1FY2020. The cost-to-income ratio improved to 53.0% in H1FY2020 compared to 60.7% in H1FY2019. An effective tax rate declined to 23.9% in H1FY2020 compared to 34.7% in H1FY2019. The net profit has increased 115% to Rs 362.26 crore in H1FY2020.

AU Small Finance Bank: Financial Results

 

Particulars 1909 (3) 1809 (3) Var % 1909 (6) 1809 (6) Var % 1903 (12) 1803 (12) Var %
Interest Earned 1033.43 683.39 51 1990.82 1283.78 55 2948.84 1767.19 67
Interest Expended 581.84 362.22 61 1143.65 676.10 69 1606.35 826.73 94
Net Interest Income 451.59 321.17 41 847.17 607.68 39 1342.48 940.46 43
Other Income 150.79 122.50 23 361.73 225.52 60 462.03 388.06 19
Net Total Income 602.38 443.67 36 1208.90 833.20 45 1804.51 1328.52 36
Operating Expenses 324.68 268.49 21 640.36 505.64 27 1082.61 752.61 44
Operating Profits 277.70 175.18 59 568.53 327.55 74 721.91 575.91 25
Provisions & Contingencies 61.01 34.98 74 92.52 70.09 32 141.78 132.56 7
Profit Before Tax 216.69 140.20 55 476.01 257.46 85 580.13 443.35 31
Provisions for Tax 44.75 48.79 -8 113.76 89.23 27 198.32 151.31 31
Net Profit 171.94 91.42 88 362.26 168.24 115 381.81 292.04 31
EPS*(Rs) 23.44 12.46 24.69 11.47 13.01 9.95
* Annualized on current equity of Rs 292.43 crore. Face Value: Rs 10, Figures in Rs crore,
Source: Capitaline Corporate Database

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