AU Small Finance Bank looking at 30% asset growth for five years


AU Small Finance Bank expects to grow its balance sheet (assets) by 30 per cent year-on-year basis for five years. It plans to raise fresh equity capital in the current financial year (FY23) to support business growth.

The Jaipur-based lender witnessed a growth of 34 per cent YoY in its assets to Rs 69,078 crore by end of March 2022 from Rs 51,591 crore a year ago. Its asset base was Rs 9,781 crore at the end of March 2017.

Sanjay Agarwal, managing director & chief executive officer told Business Standard that along with 35-40 per cent growth YoY in deposits, the lender would grow the asset book at 30 per cent and profits by 25 per cent YoY for five years.

While its current capital adequacy ratio at 21 per cent is well above the minimum regulatory norms of 15 per cent, the bank plans to raise fresh equity capital in the current financial year depending on market conditions.

The bank would like to raise capital in this fiscal to support business growth for two years, Agarwal said. Its Tier-I capital ratio of 19.7 per cent (21.5 per cent in March 2021) against minimum requirement 7.5 per cent.

The lender announced its intent to give one equity bonus share for one equity share held for FY22. This is expected to expand the paid up capital base by retaining part of profits.

Asked about the approach to building a low cost deposit base, Agarwal said the share of Current Account and Savings Accounts ( CASA) in total deposits rose to 37 per cent by end of March 2022 from 23 per cent a year ago. Now, the bank is working to raise that share to over 40 per cent.

As for plans to become a universal bank, Agarwal said there is a desire to become a universal banking entity in the long term. The bank would look at RBI’s assessment of its capability before making a move in this regard. The bank has completed five years as a small finance bank to become eligible for applying for a universal bank license.

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