AU Small Finance Bank Limited — Q2 FY25
AU Small Finance Bank reported a strong Q2 FY25 with PAT of ₹571 crore, up 14% QoQ, driven by robust deposit growth (total deposits crossed ₹1.1 lakh crore, up 12.7% QoQ) and im...
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.
64%Questions answered2Evaded / deflected11Questions audited
Partial answer
High priority
Confidence in sustaining NIM at 6% without rate cut till March 2025?
Asked by Renish Patel, ICICI Securities
Management gave qualitative assurance but no specific quantitative guidance on sustaining NIM without rate cuts.
speculative about rate cutsno firm commitment
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Question
So earlier you were guiding at around 5.7, 5.8, and now we are guiding at 6. So how confident we are about sustaining yields and cost of fund at current level, especially if there is no rate cut till March 2025?
Sanjay Agarwal, MD and CEO
We expect that our NIMs should get protected close to 6%. And it's very early... there may be a rate cut in, even in December also... So overall, there is enough room for us to protect NIM.
Evasive
Medium priority
Impact of RBI circular on foreclosure charges for SME customers?
Asked by Renish Patel, ICICI Securities
Management declined to provide any impact assessment, citing lack of clarity.
deferred to future clarityno calculation done
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Question
On this RBI circular on sort of revisiting the foreclosure charges on the micro and small customers. So what is our RBI assessment? And what is the impact we should have?
Sanjay Agarwal, MD and CEO
I would want to wait for the clear guideline because governor only spoke briefly... So we haven't done any calculation. But if foreclosure charges gets waived on the variable book, then it won't be a much impact.
Partial answer
High priority
Will MFI catch-up offset improvement in secured, keeping credit cost at 1.28%?
Asked by Kunal Shah, Citigroup
Management acknowledged the trade-off but did not explicitly reaffirm the 1.28% credit cost guidance.
no explicit confirmation of 1.28% guidanceshifted to ROA protection
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Question
Is it like the catch-up in the MFI, which will offset the improvement in the secured and commercial banking, and that's the reason we are still continuing with that guidance of 1.28% credit cost? And does it include contingency buffer?
Sanjay Agarwal, MD and CEO
Absolutely, you are spot on... we want to really play safe there and hope that secured assets will pull back, and we might have extra cost on MFI... but still we want to protect our ROA of 1.6%.
Evasive
Medium priority
How will LCR be improved given draft circular and current 112% level?
Asked by Kunal Shah, Citigroup
Management provided no concrete steps to improve LCR, citing pending circular.
deferred to regulatory clarityno specific plan shared
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Question
On LCR, now down to almost 112%. How should we look at it given the draft LCR circular also being there? And how would we tend to improve this LCR ratios going forward?
Sanjay Agarwal, MD and CEO
Circular is in WIP... as of now, anything around 115, we are very comfortable... we haven't discussed much internally till now because there is no clarity... we'll comment once that circular comes.
Partial answer
High priority
Is credit cost guidance of similar to H1 due to conservatism or expected Q3 worsening?
Asked by Nitin Aggarwal, Motilal Oswal Financial Services
Management cited uncertainty but did not clarify whether guidance is conservative or reflects expected worsening.
no clear distinction between conservatism and expected deterioration
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Question
We are guiding to which again, to be a similar number as one H on credit cost. So is it more out of conservatism or are we expecting Q3 to be worse off than Q2?
Sanjay Agarwal, MD and CEO
My worry is more on MFI... we need one more quarter to really assess the real impact... I want to really play conservative rather than more aggressive here, because there are little unknowns.
Answered
High priority
Mix of slippages between secured and unsecured assets?
Asked by Nitin Aggarwal, Motilal Oswal Financial Services
Management provided specific percentage breakdown of slippages by secured/unsecured.
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Question
The slippages during the quarter have gone up sharply Q on Q. So what is the mix of this, if you look at between the secured and the unsecured assets?
Deepak Jain, AVP
From the unsecured side, the slippages came around 33% out of the total slippage during this quarter. That is from the secured side. The unsecured piece mainly constitute of credit card and the finance personal loans.
Partial answer
Medium priority
How will exposure to borrowers with 5+ lenders move and when will credit cycle end?
Asked by Nitin Aggarwal, Motilal Oswal Financial Services
Management gave directional view but no specific timeline for credit cycle normalization.
no timeline for credit cycle endqualitative only
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Question
When you look at the exposure to the borrowers more than five lenders... how is that likely to move? And so as to assess by when we can expect this credit cycle to end?
Rajeev Yadav, Deputy CEO
We have 8% of our borrowers who have taken loans from more than five lenders... I personally believe this number will gradually decline over the next few months in our portfolio.
Answered
Medium priority
Is CASA growth driven by bulk deposits or sustainable factors?
Asked by Pritesh Bumb, DAM Capital
Management explained CASA growth was diversified and not bulky, with specific growth rate.
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Question
On your CASA. So that has grown very strong this quarter, and especially driven by CASA. So any bulkiness in that CASA, or is it something positive happening on it?
Prince Tiwari, Head of IR
CASA grew 8% quarter on quarter... It's not chunky money... all the verticals towards CASA... that has come. It's not chunky money, as you said, but I think transition money is there.
Answered
Medium priority
Which geographies are problematic in MFI portfolio?
Asked by Pritesh Bumb, DAM Capital
Management named specific states and provided portfolio percentages.
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Question
In terms of geographic perspective, which kind of geographies for us particularly is seeing some problem?
Uttam Tibrewal, Executive Director
The more difficult states are... Bihar state which is slightly more challenging. The second most challenging state is Odisha. The good news is that our Bihar state is actually the eighth largest state, at about 7.86% of our microfinance portfolio.
Answered
Low priority
Have you taken CGFMU cover on MFI portfolio and what percentage?
Asked by Shailesh Kanani, Centrum Broking
Management clearly stated no cover taken previously and just started, with negligible amount.
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Question
Have we considered or taken any CGFMU new cover on that? And if yes, what percentage of portfolio would be covered?
Prince Tiwari, Head of IR
On CGFMU, the answer is till last financial year, we have not taken any cover. We have only started taking the CGFMU cover from this quarter. So, the standalone Fincare Bank, we have not taken any cover for CD from the portfolio on PCR bank.
Answered
High priority
Can incremental spreads continue to be better than backbook spreads?
Asked by Pranav (JP Morgan), JP Morgan
Management explained drivers and affirmed sustainability for the financial year.
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Question
Is your incremental spreads continue to be better than your backbook spreads, despite you slowing down the disbursements in MFI and credit cards? So it's 15.2% versus 14.4%. So what segments are driving this, and can this continue?
Prince Tiwari, Head of IR
All our core assets... Wheels, MBL, housing, everywhere we have enhanced disbursement yields... It should sustain at higher than at least on the bookings going forward also.
Answered
Medium priority
Why was employee cost flat despite 11% higher disbursements? Any change in payout structure?
Asked by Rohan Mandora, Equirus Securities
Management explained cost containment through productivity and synergy without policy changes.
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Question
There was 11% higher disbursement sequentially, but employee cost was similar. Just want to understand, is there a change in the payout structure or origination mechanism?
Sanjay Agarwal, MD and CEO
We remain very focused in terms of the productivity levels... we haven't stopped any kind of investment... we got around 140-odd branches from Fincare, so we haven't done any kind of branch expansion this year.