Life as a financier Retail Focused Differentiated Well Capitalized Fast Growing Customer Centric ET Now The Bank with more Rural Branches ET Now Bank with Best Technology Orientation ET Best BFSI Brand 2018 Times Ascent Dream Companies to work for Rajasthan Best Brand Award 2018 August 29, 2018
Where were we? AU was well positioned to grow year-on-year in its NBFC incarnation
Flashback! Reminiscing the Past From Gully To Ranji Cricket 1996 2002 : Started with one room office & no capital. Got registered as NBFC Built the Business with HNI support for 6 years. Got a Fix on the opportunity around Retail Lending Became confident & overcame the fear to lend and capitalized on opportunity in North 2003 07 : Channel Business Partner for HDFC Bank in Rajasthan, Maharashtra Perfect collaboration of raw talent with a matured player अच छ स गत क असर अच छ ह त ह! 2008 14 Sponsorship from Marquee Investors including Motilal Oswal, IFC, Warburg Pincus, Chrys Capital and Kedaara Capital and Multilaterals Agency including ADB, FMO etc. AU Housing and AU Insurance two successful subsidiaries Expanded From 1 Product to multiple products; From 1 State to 11 States 2015-17 SFB License; Transitioning AUM of INR 10,734 Cr with HALF A MILLION CUSTOMERS as on 31 st March 2017 Along side:- Profitable & Superior Asset Quality. Seasoned Team with Strong Execution forte
AU Bank is the only asset financing NBFC amongst 9 others successful applicant of Small Finance Bank License. Why a Bank? Grabbing the opportunity and making the obvious choice
Reasons to become a Bank Power of the Platform Scalability & Economics Selected To Play The TEST MATCH Perpetual Existence Synonymous to the concept of Money Greater Trust & Respect Bank is a Brand, Therefore Stronger Pull Entry Barrier and The Substantive Regulatory Environment
What had to be done? Team AU was ready to take on the challenges head on!
Task at Hand Converted AU to Indian Company Divested Au Housing, Au Insurance, M- Power and Index Money Within 18 months of Bank Launch Procured the best technology stack, training & transitioning. Partnered with Oracle & Accenture for the technology transformation Formed an Independent Board Branding of AU SFB & चल आग बढ़ Built 300 state of the art Bank branches Hired more than 3000 employees (received 1 lakh applications) Stellar Performance in both FYs - FY 15-17 CAGR AUM ~39%, PAT ~ 49% Launched the Bank on 19 th April 2017 Transitioned into a Bank without any capital raise Bank got listed on 10 th July 2017 IPO Oversubscribed by 54x
Launching a Bank was like Landing on the Moon Were Expectations Validated?
Key Highlights 395 Branches 1 Scheduled Bank 646,685 Deposit 11 states 96 Asset Centers 1 292 ATMs 11,535 employees Fortune India 500 Accounts Deposit Mobilized ~INR 10,000 Cr 2 8,515 11,535 5.5 Lakh sqft area Additionally appointed Udaan as Corporate DSA Mar'17 Jun'18 FY18 Disbursements (Q1FY19 INR 2,885 Cr) 10825 Active Loan Accounts Loans Under Management Assets Under Management Net Worth INR Crore INR Crore INR Crore INR Crore INR Crore 2,80,349 3,84,895 10,734 17,322 13,769 23,652 1,988 2,843 PAT (Q1FY19 INR 77 Cr) 305 292 FY17 6730 Mar'17 Jun'18 Tie up with 17 AMCs for distributing MF and 3 Corporate Agency tie ups for Health, General & Life Insurance Mar'17 Jun'18 Mar'17 Jun'18 Mar'17 Jun'18 FY17 FY18 1 306 branches and 89 Banking Outlets 2 Includes Certificate of Deposit of INR 1928 Crore
Retail Focused Franchise ASSETS BRANCH BANKING Retail Assets 1. Wheels 2. MSME 3. SME 4. Home Loan 5. Agri SME 6. Gold 7. Consumer Durable Small and Mid-Corporate Assets 8. NBFC Lending 9. Business Banking 10. Construction Finance Loan AUM- INR Billion -Wheels - 77 -MSME and SME - 64 -Other Retail - 2 -NBFC - 18 -REG - 7 -BB - 5 Total 173 Strong Focus On Cross Sell Branch Banking 11. Savings Accounts 12. Current Accounts 13. FD 14. RD 15. Lockers 16. Debit Cards 17. ATMs 18. POS 19. Insurance 20. Mutual Funds 21. OD Against FD 22. Forex 23. Trade Finance Branches Classification -Metropolitan 50 -Urban 104 -Semi Urban 132 -Rural 3 -Unbanked Rural 106 Total 1 395 10
Key Initiatives! Customer Delight Higher Rate of Interest Monthly interest payouts Paperless transactions at branches (with no or minimal forms) Extended Banking hours & No home branch idea अ ग ठ अन ठ ह! Employee Pull Concept of Home coming for Hiring Wealth creation via ESOP Digital and Automation Scaling up distribution / Financial Inclusion thru Digital Digital on-boarding through Tab STP CD & 2 Wheeler Loans - fully digital AU Abhi App for self on-boarding AU Business App for Lead aggregation
Along came some Challenges
Challenges Small Finance Banks Competitive Intensity irrational behavior Established Banks NBFC,HFC & FIs Customer Mindset RBI s plan and roadmap for SFBs - To become clearer with time Push for one Bank Theory Execution
A Bank is not just a platform to lend; it provides a platform to serve the customers with the universe of Financial Services Learnings
Key Takeaways as a Small Finance Bank Strong Pull of Platform customers, employees, investors and vendors! NOTHING CAN OUTMATCH A BANK Focus on Digital, Data, Distribution & Delight (4D) Partnership with Fintechs Customer deeply trusts the Bank More products per customer Shift from product centric to customer centric Bank Cross-Sell strategy - a big game changer Adoption of Phygital Strategy Scale Up launched programs Bank is Mix of revenue Pool Work on every pool and become an Ocean! Customer convenience and profitability key for success!
Banks are Forever! The Opportunity
Opportunity and Positioning Consumer Segment FY18 Market Size AU Share (No/Amt) 5 Year CAGR ~25 Lac Units excl 2Ws ~INR 1100 Bn p.a. New ~1.6% / ~1.25% ~15-17% Used 2Wheeler ~40.0 Lac Units excl 2Ws ~INR 1200 Bn p.a. ~ 2.02 crores Units ~1.6%/ ~1.2% ~10-12% Just Started ~11-13% ~INR 223 Bn p.a. Housing Gold Rs. 4,721 Bn per year ~Rs. 16 Trillion o/s INR 2,391 Bn Just started Just started ~18-20% ~13-15% FY22 AU $10Bn Consumer Durable INR 1,100 Bn Just started ~20% Personal Loan ~INR 19,000 Bn Education Loan ~INR 800 Bn Loan Against Security Potential Product Segments
Opportunity and Positioning Commercial Segment FY18 Market Size ~22.5 Lac Units excl 2Ws ~INR 600 Bn p.a. AU Share (No/Amt) 5 Year CAGR CV & Taxi ~3.25% / ~4.4% ~14-16% MSME FY18 ~6.3 Crore ~0.1%/~0.3% Outstanding ~INR 18 Trillion ~12-14% Wholesale Bank NBFC Size ~ INR 50 Bn Business Banking fund / non-fund based Focus on Small & Mid size entities ~10-15% FY22 AU $10Bn Unsecured Business Loans Potential Product Segments
Opportunity and Positioning Digital & Deposit FY18 Market Size AU Share (No/Amt) FY 22 Size Digital Digital lending @ $330 Bn total disbursements till FY 18 Just started >$1 Tn Deposit ~$1.3 Trillion Deposit Base 0.1% >$1.5 Tn Depository Services (DMAT) Wealth Management Advisory Potential Product Segments FY22 AU $10Bn
Way Forward AU has all the characteristics of the Bank but has not left the NBFC approach, agility and flexibility
Way Forward Build a Retail Bank by leveraging 4D Digital, Data, Distribution and Delight Customer Centric Business Model Consistently grow assets by 30-35% p.a.; Assets Targeted to reach at USD 10 Bn by 2022 Funded by Granular Deposit Base; Deposits Targeted to fund ~70-75% of Assets Become the Most Eligible SFB to be Promoted as Universal Bank
WORK HARD INTEGRITY NURTURE TALENT RESPONSIBLY ENTREPRENURIAL CUSTOMER FOCUS SUCCEED TOGETHER DETAILS LOOK FOR ACTION BIAS FOR Thank You Government of India Thank You RBI Thank You All AU S JOURNEY IS FOREVER चल आग बढ!