AU Small Finance Bank Limited — Q2 FY24
AU Small Finance Bank reported Q2 FY24 PAT of INR 402 crore, up 17% YoY, driven by strong fee income growth from insurance and credit cards.
neutral
medium
Financial stats pending filing verification
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.
67%Questions answered2Evaded / deflected12Questions auditedContradictedNumbers vs filing
Partial answer
High priority
Rationale for merger and impact on yield/margins
Asked by Bhavik Dave, Nippon India Mutual Fund
Acknowledged challenges but did not give specific yield or margin outlook.
no specific margin guidancedeferred to long-term strategy
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Question
How did you think about this merger? ... And second question is, sir, on the competitive intensity on our main business... yields have remained quite stagnant... margins are down to 7.5%.
Sanjay Agarwal, Founder, Managing Director and CEO
I think it's a testing time for us, and I strongly believe that we will sail through it. There will be some couple of more quarter challenges. But in the long term, I strongly believe that we are on the course of our March 2027 agenda.
Answered
High priority
Reason for sharp jump in fee income and sustainability
Asked by Renish Bhuva, ICICI Securities
Directly attributed the jump to insurance income and confirmed sustainability.
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Question
The general banking fee has seen a very sharp jump in Q2, from INR 55 odd crore in Q1 to almost INR 150 crore in Q2. So can you please throw some light on what is driving this sudden jump?
Sanjay Agarwal, Founder, Managing Director and CEO
It's a sustainable business. Mainly, it's related to insurance, where we have the other insurance partners, and our insurance income, insurance business is also increasing.
Answered
High priority
Risk of growth derailment due to merger integration
Asked by Renish Bhuva, ICICI Securities
Directly addressed the concern, explaining the complementary nature and separate unit structure.
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Question
The employee addition is close to 20,000... does that possess a risk of some growth derailment at the final entity?
Sanjay Agarwal, Founder, Managing Director and CEO
I don't think that there would be any derailment because Rajeev and his team is also very capable... Fincare Bank will become Fincare unit, and they will continue to work as usual.
Answered
Medium priority
Key strengths of Fincare beyond geography and MFI
Asked by Rohan Mandora, Equirus Securities
Listed specific strengths: team quality, governance, and regulatory compliance.
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Question
What, as per you, are the key strengths in the business model of Fincare, other than the complementary geographical presence and MFI book that comes in?
Sanjay Agarwal, Founder, Managing Director and CEO
The team which we are getting is tremendous... they have shown their entrepreneurial mindset to come up with all those challenges... they are banks, so they are well-governed.
Evasive
High priority
Comfort with SFB status till 2027 and universal bank plan
Asked by Rohan Mandora, Equirus Securities
Avoided a direct answer on the SFB timeline, instead spoke generally about growth.
did not confirm or deny SFB timelineredirected to franchise building
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Question
In the presentation, we have made a comment that the management continues to focus on seamlessly executing our strategy till 2027. So does that mean that we are comfortable operating as an SFB till 2027?
Sanjay Agarwal, Founder, Managing Director and CEO
I think we are walking on that path where the franchise will become a formidable force in coming years.
Answered
Medium priority
Strategy on securitization and PSL compliance
Asked by Nitin Aggarwal, Motilal Oswal
Clearly explained the dual purpose of securitization and its role in PSL compliance.
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Question
We have been going in for higher securitization this quarter, which is around INR 2,900 crore. So what is your strategy on the same going forward? And how will that impact the PSL compliance?
Prince Tiwari, Head of Investor Relations
Our strategy this year is more to sell non-PSL as compared to priority sector assets. So far, whatever we have securitized, bulk of it has been on the non-priority sector lending book.
Evasive
High priority
Universal banking license plan post-merger
Asked by Nitin Aggarwal, Motilal Oswal
Did not answer whether the plan is deferred; instead said 'one at a time'.
deferred to laterno timeline given
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Question
One more question that I have is on the universal banking license plan. And so now after this merger, where... what are our thoughts on that? Will that get deferred?
Sanjay Agarwal, Founder, Managing Director and CEO
Nitin, again, I repeat, one at a time, you know? So the idea is to really build a bank with all-round capabilities... once we settle down, we will look for the next thing.
Answered
Medium priority
Reason for INR 700 crore fund infusion in Fincare
Asked by Anand Dama, Emkay Global
Directly explained the capital raise was for business needs, not cleanup.
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Question
What is the reason for the INR 700 crore fund increase in Fincare SFB? Is it more to do with that basically you want some cleanup act before the merger happens?
Sanjay Agarwal, Founder, Managing Director and CEO
Fincare was about to launch their own IPO... they were supposed to raise capital and they're high leveraged... they need a capital for their own business as usual.
Partial answer
Medium priority
RBI's view on acquiring a healthy SFB
Asked by Anand Dama, Emkay Global
Expressed optimism but acknowledged it's the regulator's decision, no firm answer.
speculativeno concrete assurance
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Question
What is your view that RBI would take, particularly given that we are acquiring a very healthy SFB?
Sanjay Agarwal, Founder, Managing Director and CEO
We strongly believe that the kind of complementary position we have to each other, the regulator would be... would only support this, but it is their own decision.
Answered
Medium priority
Lock-in for Fincare shareholders post-merger
Asked by Umang Shah, Kotak Mutual Fund
Clearly explained the holdco structure and expected lack of immediate liquidity.
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Question
As a part of the merger agreement, is there any lock-in for the existing shareholders of Fincare SFB or the holdco? Or how does that work?
Prince Tiwari, Head of Investor Relations
The holdco is not a part of the entire merger process... it's up to them to decide... we don't really expect a lot of liquidity over the next at least 15-18 months.
Partial answer
High priority
How MFI book fits AU's pristine credit culture
Asked by Santanu Chakrabarti, BNP Paribas
Explained the rationale but did not quantify how credit culture will be maintained.
no specific credit cost guidance for MFI
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Question
Bringing in an MFI book... how does that fit into your credit culture of where every rupee must come back that goes out?
Sanjay Agarwal, Founder, Managing Director and CEO
The world has changed dramatically... the team has done tremendously well to understand the risk... we will provide adequately.
Partial answer
Medium priority
Reason for large securitization despite strong deposit growth
Asked by Param Subramanian, Nomura
Gave general planning rationale but did not explain why securitization was needed despite deposit growth.
no specific reason for securitization volume
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Question
Despite having a strong 9% quarter-over-quarter deposit growth, you had to do such a large securitization. Could you explain the reason?
Sanjay Agarwal, Founder, Managing Director and CEO
We plan ourself for whole year basis... it is not that it will be available maybe last quarter... we need to be more smart enough.
Quantitative claims vs filed numbers
| Claim | Management said | Filing | Verdict |
|---|---|---|---|
| Fincare first half PAT INR 219 crore | ₹219 cr | ₹402 cr | Understated vs filing |
Filed figures sourced from Screener.in. Claims within a small tolerance of the filing are marked “matches filing”.