Q1 2025 AU Small Finance Bank Ltd Earnings Call Transcript
Key Points
- AU Small Finance Bank Ltd (NSE:AUBANK) has filed an application for a universal banking license, marking a significant milestone in its growth journey.
- The bank reported strong asset disbursement, achieving 20% of its annual target in the first quarter with a yield of 15.8%, up by 250 basis points from the previous quarter.
- The bank's CASA deposits grew by 1.8% over the pro forma merged CASA as of March 31, 2024, reflecting a strategic focus on low-cost deposits.
- The bank's asset quality remains strong, with a credit cost guidance of 1.10% to 1.15% for the year, indicating robust risk management practices.
- The integration of Fincare branches and the introduction of new products and partnerships have broadened the bank's service offerings and customer reach.
- The bank's cost of funds remains a concern, with a potential increase of 35 to 40 basis points expected over the fiscal year, which could impact margins.
- The microfinance segment has shown signs of stress, with collection efficiencies being lower than expected due to over-leverage and external factors like heat waves and elections.
- The bank's credit card business has faced challenges, with a need for calibration and optimization of credit appraisals and limits to manage risks.
- The bank's overall deposit growth was muted in the first quarter, necessitating a significant ramp-up in the remaining quarters to meet annual targets.
- The bank's cost-to-income ratio is expected to remain high, around 61% to 62%, indicating ongoing operational challenges.
Ladies and gentlemen, good day, and welcome to AU Small Finance Bank Q1 FY25 earnings conference call. (Operator Instructions) Please note that this conference is being recorded.
I now hand the conference over to Mr. Prince Tiwari, Head of Investor Relations at AU Small Finance Bank. Thank you, and over to you.
Thank you, Yashasvi. And very good evening to everyone, and welcome to AU Small Finance Bank earnings call for the first quarter of FY25. We thank you all for joining the call today evening. The format for today's call will be very similar to last few quarters where we will have opening remarks from the senior management for the first 20, 25 minutes, and I will follow with a question and answer session of about 35 to 40 minutes.
To start the call, we will have our MD and CEO, Mr. Sanjay Agarwal share his thoughts and strategy for the -- on the overall performance of the bank and outlook for the remainder of the year. He will be followed by our Head of Liabilities, Mr.
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