AU Small Finance Bank Limited — Q1 FY24
AU Small Finance Bank reported Q1 FY24 PAT of INR 387 crore, up 44% YoY, driven by strong asset growth (gross advances +29% YoY) and stable asset quality.
neutral
medium
✓ Verified against BSE filing
Claim Ledger
Did management answer the analysts?
Every material analyst question, graded on whether management actually answered it — with the verbatim exchange and quantitative claims checked against filed numbers.
59%Questions answered2Evaded / deflected11Questions audited
Partial answer
High priority
Confidence in deposit mobilization after rate cut and excess liquidity exhaustion.
Asked by Renish Bhuva, ICICI Securities
Management gave historical growth and strategy but no concrete near-term deposit growth target.
no specific guidance on future deposit growthqualitative rather than quantitative
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Question
Going ahead, in absence of excess liquidity plus the deposit rate cut, sir, what gives you the confidence that we'll be able to accelerate deposit mobilization in coming quarters?
Uttam Tibrewal (Executive Director and Deputy CEO)
Our last four years CAGR on deposit growth is around 35%, north of 35%, right? We have built more or less on everything... we want to have a deposit-led asset growth strategy...
Partial answer
High priority
Reason for muted FBL growth and rising stress in the segment.
Asked by Renish Bhuva, ICICI Securities
Acknowledged stress but gave no specific numbers on growth drivers or stress levels.
no quantitative explanation for muted growthattributed to seasonality
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Question
In Q4 it was 2%, this quarter it is also 2.5%. This quarter we have seen the offent fee moving up in FBL. If you can just quantitatively tell us what is going on this segment? Is there any stress building up?
Vivek (role not stated)
It's more of a cyclic thing, we always have this uptick in Q1 on GNPA... on the demand side... the ground situation has pretty changed in terms of demand. Incrementally we might see numbers coming back to normal.
Partial answer
Medium priority
Trend in disbursement yield after 29 bps increase this quarter.
Asked by Nitin Aggarwal, Motilal Oswal Financial Services
Management gave qualitative confidence but no quantitative yield outlook.
no specific forward guidance on yield trajectoryqualitative optimism
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Question
This quarter we have seen a good 29 basis point increase in disbursement yield. How do you see the trend going forward, which signals that now we are seeing a better ability to pass on these rates?
Sanjay Agarwal (Managing Director and CEO)
Team has done a very good job in last 1 quarter that they are able to pass on around 30 bips. I think incrementally we will do better here... Overall our 64% book is around fixed...
Evasive
Medium priority
Contribution of AD-1 license to revenue and plans for universal banking license.
Asked by Nitin Aggarwal, Motilal Oswal Financial Services
Management declined to quantify revenue impact and deflected on universal license timeline.
deferred to three-year horizonno specific revenue contribution given
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Question
How do you see this contributing to the revenue and business growth over FY 25, once everything is in place? What are the plans to apply for the universal banking license also?
Sanjay Agarwal (Managing Director and CEO)
Next year will be too early to comment that it will have a large income pool for us... In three-year term you will see it on a size and scale... We are not in hurry to become universal.
Declined
Medium priority
Incremental cost of funds after deposit rate cut.
Asked by Nitin Aggarwal, Motilal Oswal Financial Services
Management explicitly declined to disclose incremental cost of funds.
refused to provide numberasked analyst to guess
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Question
Just lastly, one data point on the incremental cost of funds... where will you approximate the incremental cost of fund is right now?
Prince Tiwari (Chief of Financial Institutions Group and Chief IR Officer)
We have kind of stopped giving for last couple of quarters... You make a educated guess around the blended rate, and that's where we would be.
Partial answer
Medium priority
Long-term ROA and cost-to-income trajectory by 2027.
Asked by Madhuchanda Dey, Moneycontrol
Provided aspirational targets but caveated them as not commitments.
disclaimed numbers as not bindinglong-term aspirational
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Question
Where do you see the ROA? Especially my question comes from the cost-to-income ratio trajectory. Where do we see ourselves in that journey by that time?
Sanjay Agarwal (Managing Director and CEO)
Cost-to-income ratio can be around 55, 56, our ROA can be north of 2% again... don't hold me for these numbers...
Answered
Low priority
Size and classification of ECLGS exposure.
Asked by Shailesh Kanani, Centrum Broking
Provided specific size and classification without evasion.
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Question
What is the size of ECLGS in our book, and how is it classified as of now? Is it standard, or what is the amount of it?
Prince Tiwari (Chief of Financial Institutions Group and Chief IR Officer)
It is about INR 560 crores... Bulk of it is standard, and there is some amount of NPA.
Answered
High priority
Trade-off between margins and growth; willingness to compromise growth for margins.
Asked by Kunal Shah, Citigroup
Management directly affirmed ability to achieve both growth and margin targets.
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Question
If that leads to some kind of a compromise on growth, would you do that just to sustain the margins somewhere around 5.5%-5.7% odd?
Prince Tiwari (Chief of Financial Institutions Group and Chief IR Officer)
We are very confident that we'll be able to deliver the growth that we have talked about with this kind of margins.
Answered
High priority
Credit cost trajectory after using COVID buffer and higher slippages.
Asked by Kunal Shah, Citigroup
Management gave clear guidance that credit cost will not materially change.
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Question
If that gets over, then should we ideally see the credit cost also increasing up?
Prince Tiwari (Chief of Financial Institutions Group and Chief IR Officer)
For the full year, our credit cost guidance doesn't change very dramatically from where we were in FY23... we don't really see a material change in our credit cost.
Answered
Medium priority
Rationale for using INR 62 crore COVID buffer in one quarter.
Asked by Prakhar Agarwal, Elara Capital
Management explained the rationale clearly without evasion.
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Question
What could be a thought process of using this buffer that we build up over a period of time and then utilizing essentially in 1 quarter?
Prince Tiwari (Chief of Financial Institutions Group and Chief IR Officer)
Given that specific contingent event has gone through, we have been utilizing that... Enough buffer is already there in the balance sheet in terms of provisioning.
Answered
High priority
Normalized credit cost level for the business model.
Asked by Prakhar Agarwal, Elara Capital
Management provided a specific normalized credit cost target.
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Question
What should ideally be a normalized level of credit cost for the business that you run?
Sanjay Agarwal (Managing Director and CEO)
Ultimate credit cost, an entire book should not exceed 0.5%. That's my overall sense.
Partial answer
Medium priority
Credit cost assumptions for credit card business and impact on overall credit cost.
Asked by Param Subrahmanian, Nomura
Management gave qualitative range but no precise credit cost assumption.
no specific credit cost number givendeferred to future
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Question
What sort of credit cost are we building into the business model going ahead?
Mayank (Head of Credit Card Business)
Almost we are also as of now, we are quite low than this, but yes, as the business build up... we are also thinking of keeping it in the same range.