Result Analysis: AU Small Finance Bank Limited (CMP: Rs.621) Result Update: Q3FY23

AU Small Finance Bank (AU SFB) is engaged in providing a range of banking and financial services including retail banking, wholesale banking and treasury operations and other services. The major business segments of the bank are Treasury; Retail banking; Wholesale banking; and Other banking operations. It is the largest small finance bank with a deep understanding of the rural and semi-urban markets, which have enabled it to build a robust business model facilitating inclusive growth. The bank has 980 touchpoints in 710 locations across 20 states and 2 UTs and has 524 ATMs across India.

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    Stock Details
    Market Cap. (Cr.) 41420
    Equity (Cr.) 666.51
    Face Value 10
    52 Wk. high/low 733 / 525
    BSE Code 540611
    Book Value (Rs.) 151.19
    Sector Banks


    Key Ratios
    ROE (%): 16.39
    TTM EPS: 18.88
    P/BV: 4.1
    TTM P/E: 32.92

    Result Highlights:

    • AU SFB has reported its highest ever quarterly profits with an increase of 30.12% YoY and 14.58% QoQ in the for the December quarter’ 22 to Rs.393 cr.

    • Net Interest Income of the bank grew by 40.61% YoY and 6.46% QoQ to Rs.1,153 cr. whereas Net Interest Margin decreased by 10 bps on QoQ and 20 bps on YoY basis to 6.1%.

    • Banks’s total advances grew to Rs.55,601 cr. by 38.38% YoY in Q3FY23 compared to Rs.40,181 cr. in Q3FY22.

    • Deposits traction continued and was aggregated to Rs.61,101 cr. as of December 31, 2022, up 5% QoQ and 16% since March’22

    • Asset quality of the bank improved further driven by sustained business momentum with GNPA declining further to 1.81% QoQ and NNPA to 0.51%; Standard restructured advances declined to 1.4%

    • On yearly basis, Treasury segment grew by 42%, Retail banking segment grew by 32%, Whole sale banking segment grew by 71% and Other banking operations segment by 51%.

    • CASA deposits of the bank grew by 35% YoY to reach Rs.23,471 lakh cr. however CASA ratio decreased on both YoY and QoQ basis by 100bps and 400bps respectively at 38%.

    • Provisioning Coverage Ratio (PCR) of the bank improved to 72% (75% including technical write-off); Additional provisioning in the form of Contingency provision of ₹98 Cr and Restructured provision of ₹ 127 Cr.

    • Bank established its 1,000th touchpoint with a branch in Indiranagar, Bengaluru. In all, it opened 42 new touchpoints; Established presence in two new states – Andhra Pradesh and Kerala.


    Financial Performance:

    Financial- Performance-Au-small

    Shareholding Pattern:

    Particulars %
    Promoters & Promoter Group 25.58%
    FIIs 39.19%
    DIIs 21.33%
    Public 11.78%
    Others 2.12%

    Managerial commentary:

    Sanjay Agarwal, MD & CEO, AU Small Finance Bank said, “Despite the challenging environment around inflation and liquidity, we were able to maintain margins, deliver growth in loan market share, improve asset quality, and focus on productivity while achieving our highest ever quarterly profits. I believe India is well placed in the post pandemic world. Our favorable demographics, stable democratic set up, and increasing impact of technological innovations like India Stack coupled with structural reforms are helping India emerge as a knowledge and technology leader in the world. Overall, our Bank is well positioned to capitalize on the emerging opportunities, and the recent acknowledgment as ‘Best Small Finance Bank’ by BT-KPMG will inspire us further”.


    Q3’FY23 was another quarter of strong and consistent performance across parameters  for AU Small Finance Bank delivering healthy & calibrated loans and deposits growth, stable margins and asset quality, and sustained traction across credit cards and other digital initiatives amidst a challenging macro environment. The Balance sheet size crossed ₹ 80,000 Cr mark and the Net worth of the Bank has reached ₹ 10,540 Cr, a growth of 5x in ~5 years (since start of the Bank in April’2017). The quarter also saw collection efficiencies sustaining at 107%, resulting in further improvement in asset quality. The bank reported EPS of Rs.15.46 for 9MFY23, and we expect the company to clock in the EPS of Rs.20.61 for FY23 on TTM basis.


    Particulars (In Rs. Cr.) Q3FY23 Q2FY23 Q3FY22 QoQ % YoY%
    Interest earned 2,118 1,992 1,496 6.33% 41.58%
    Interest Expended 965 909 676 6.16% 42.75%
    Net Interest Income 1,153 1,083 820 6.46% 40.61%
    Operating Profit 556 499 458 11.42% 21.40%
    Provisions 33 43 56 -23.26% -41.07%
    Net Profit after tax 393 343 302 14.58% 30.13%
    Deposits 61,101 58,335 44,278 4.74% 37.99%
    Advances 55,601 51,743 40,181 7.46% 38.38%
    Ratios (%) Q3FY23 Q2FY23 Q3FY22 QoQ % YoY%
    Gross NPA 1.81% 1.9% 2.6% -9bps -79bps
    Net NPA 0.51% 0.56% 1.3% -5bps -79bps
    Provision Coverage Ratio 72% 71% 51% 100bps 2100bps
    Net Interest Margin 6.1% 6.2% 6.3% -10bps -20bps
    Capital Adequacy Ratio 22% 23.4% 19.5% -140bps 250bps
    CASA Ratio 38% 42% 39% -400bps -100bps
    Segment Income (In Cr.) Q3FY23 Q2FY23 Q3FY22 QoQ % YoY% Segment %
    Treasury 327 311 229 5.15% 42.42% 13.53%
    Retail banking 1888 1743 1424 8.32% 32.57% 78.23%
    Whole sale banking 182 171 106 6.02% 71.60% 7.52%
    Other banking operations 17 15 11 13.11% 51.38% 0.72%
    Total 2,413 2,240 1,770 7.74% 36.30% 100.00%
    Source: Company website, EWL Research

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