In three years, AU SFB expects to increase advances by 25%.

Post by: Kanchan Chandel

AU Small Finance Bank (AU SFB) is strategically charting a path for steady growth, aiming to expand its advances by a compound annual growth rate (CAGR) of 25% over the next three years. Sanjay Agarwal, MD and CEO of AU SFB, emphasized the bank's shift towards a more measured pace of growth following a merger that altered its operational landscape. Despite the adjustment, Agarwal expressed confidence that even with a 25% CAGR, the bank could effectively double its balance sheet within the stipulated timeframe. The Jaipur-based bank, which obtained its Small Finance Bank (SFB) license in 2017, previously experienced rapid annual advances growth exceeding 30%. However, in light of recent developments, the management acknowledges the importance of pursuing growth that is both responsible and sustainable.

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Agarwal underscored the critical nature of the initial ten years for any emerging financial institution, acknowledging the heightened risks of errors during this formative period. AU SFB's gross advances recorded a year-on-year growth of 25% to reach Rs 73,999 crore by March 31, while deposits surged to Rs 87,182 crore, marking a 26% increase. With the recent merger with Fincare SFB, Agarwal anticipates the integration process to be finalized within 9-12 months, consolidating both entities under the AU SFB brand. This merger, effective from April 1, represents a significant milestone in the banking sector, amalgamating a customer base of over 10 million, more than 46,000 employees, and a vast network of over 2,400 physical touchpoints, resulting in a combined balance sheet size of Rs 1.25 trillion.

Despite the bank's robust performance, its net profit for the fourth quarter experienced a 12% decline, dropping to Rs 370.73 crore from Rs 424.6 crore in the previous year. However, amidst this dip, net interest income registered a commendable 10% year-on-year increase, amounting to Rs 1,337 crore, while other income surged by 66.8% to Rs 555.6 crore. Notably, provisions saw a significant rise of 224% year-on-year, reaching Rs 132.5 crore. In a strategic move to diversify revenue streams and bolster fee income, AU SFB recently introduced a range of new products, including the AU SPONT Rupay Credit Card and the Secured Credit Card-NOMO. These offerings mark AU SFB's foray into secured credit cards, backed by fixed deposits, and underscore its commitment to innovation and customer-centric financial solutions.

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