NIM pressure from rising cost of funds
Management expects cost of funds to increase by 40-45 bps in FY25, which could compress NIMs further if not offset by yield improvements.
AUBANK / Q4-FY24 / risks
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AU Small Finance Bank · Material risks, their source context, and severity in the latest available quarter.
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Risk intelligence
Material risks this quarter
medium
Credit card profitability uncertain
Credit card business is not expected to be profitable for at least two years, with high credit costs (~6-6.5%) and potential regulatory changes adding uncertainty.
Regulatory risk on microfinance pricing
An analyst raised the possibility of RBI imposing a yield cap on microfinance loans, which could impact the bank's strategy to grow MFI to 10% of the book.
Integration execution risk from Fincare merger
The merger with Fincare adds complexity; integration of systems, cultures, and branches must be seamless to realize synergies and avoid disruption.