AU SMALL FINANCE BANK 2023-24 Annual Report Analysis

Mon, 8 Jul

AU SMALL FINANCE BANK has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the bank during the year 2023-24.

AU SMALL FINANCE BANK Income Statement Analysis

• Interest income during the year rose 28.6% on a year-on-year (YoY) basis.
• Interest expenses were up by 42.8% YoY during the same period.
• Operating expenses increased by 29.8% YoY during the year.
• The bank's net interest income (NII) increased by 16.5% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 5.1% in FY24 as against 5.6% in FY23.
• Other income increased by 68.8% YoY during the year.
• Net profit for the year increased by 7.5% YoY.
• Net profit margins during the year declined to 14.5% in FY24 from 17.4% in FY23.

AU SMALL FINANCE BANK Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	82,054	105,547	28.6%
Other Income	Rs m	10,345	17,459	68.8%
Interest Expense	Rs m	37,801	53,976	42.8%
Net Interest Income	Rs m	44,253	51,571	16.5%
Operating Expense	Rs m	34,403	44,648	29.8%
Pre-provision Operating Profit	Rs m	20,195	24,382	20.7%
Provisions & Contingencies	Rs m	5,916	9,035	52.7%
Profit before tax	Rs m	18,646	19,994	7.2%
Tax	Rs m	4,367	4,647	6.4%
Profit after tax	Rs m	14,279	15,347	7.5%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	5.6	5.1
Net profit margin	%	17.4	14.5

Don't Miss: Key Information for Long-term Investors

AU SMALL FINANCE BANK Balance Sheet Analysis

• The bank's deposits during FY24 stood at Rs 871.8 bn as compared to Rs 693.6 bn in FY23, thereby witnessing an increase of 25.7%.
• Advances for the year stood at Rs 731.6 bn as compared to Rs 584.2 bn during FY23, a rise of 25.2%.
• Cost of deposits for AU SMALL FINANCE BANK rose 17.5% and stood at 5.7%, while yield on advances fell to 11.5%.
• The lender's investments rose to Rs 271.3 bn during the year from Rs 200.7 bn in FY23.
• Borrowing stood at Rs 54.8 bn, a fall of 13.0% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 1,094.3 bn as against Rs 902.2 bn during FY23, thereby witnessing a rise of 21.3%.

AU SMALL FINANCE BANK Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	109,333	124,968	14.3%
Advances	Rs m	584,215	731,627	25.2%
Deposits	Rs m	693,650	871,821	25.7%
Yield on advances	%	11.7	11.5
Cost of Deposits	%	4.8	5.7
Investments	Rs m	200,720	271,334	35.2%
Borrowings	Rs m	62,987	54,794	-13.0%
Total Assets	Rs m	902,161	1,094,257	21.3%

Current Valuations for AU SMALL FINANCE BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 22.9, an improvement from the EPS of Rs 21.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 661.1, stands at 29.8 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 3.9 times, while the price to income ratio stands at 4.3 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	123.1	157.7
Earnings per share (Unadj.)	Rs	21.4	22.9
Diluted earnings per share	Rs	19.2	20.7
Avg P/E ratio	Rs	29.7	29.8
Avg P/ABV ratio	Rs	5.2	3.9
Avg Market Cap	Rs	423,950	457,339
Dividends per share (Unadj.)	Rs	1.00	1.00

Ratio Analysis for AU SMALL FINANCE BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio deteriorated and stood at 83.9x during FY24, from 84.2x during FY23. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio increased and stood at 7.41x during FY24, from 6.92x during FY23. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): AU SMALL FINANCE BANK's capital adequacy ratio (CAR) was at 20.1% as on 31 March 2024 as compared to 23.6% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank deteriorated and stood at 12.3% during FY24, from 13.1% during FY23. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank deteriorated and stood at 1.40% during FY24, from 1.58% during FY23. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank deteriorated and stood at 13.96% during FY24, from 14.98% during FY23. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. AU SMALL FINANCE BANK's gross NPA ratio stood at 1.7% as of 31 March 2024 compared to 1.7% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of AU SMALL FINANCE BANK was 0.6% in financial year 2024. This compared with 0.4% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	84.2	83.9
Debt to Equity Ratio	x	6.9	7.4
Loans / Deposits	x	0.1	0.1
Capital Adequacy Ratio	%	23.6	20.1
Return on Equity	%	13.1	12.3
Return on Assets	%	1.6	1.4
Return on Capital Employed	%	15.0	14.0
% of Gross NPAs	%	1.7	1.7
% of Net NPAs	%	0.4	0.6
Yield on Advances	x	11.7	11.5
Yield on Investments	x	5.7	6.2

To see how AU SMALL FINANCE BANK has performed over the last 5 years, please visit here.

AU SMALL FINANCE BANK Share Price Performance

Over the last one year, AU SMALL FINANCE BANK share price has moved down from Rs 761.1 to Rs 661.1, registering a loss of Rs 100.0 or around 13.1%.

Meanwhile, the S&P BSE BANKEX is trading at 60,292.0 (down 0.1%). Over the last one year it has moved up from 50,739.5 to 60,292.0, registering a gain of 9,552.6 points (up 18.8%).

Overall, the S&P BSE SENSEX is up 22.0% over the year.

(To know more, you can check out historical annual results for AU SMALL FINANCE BANK here and quarterly results for AU SMALL FINANCE BANK here)