AU Small Finance Bank disburses less loan; asset quality stable

NEW DELHI:  AU Small Finance Bank’s June quarter update has come as a relief amid worries that small finance banks would be hit harder with the second Covid-19 wave spreading to India’s small towns and hinterland.  

In a regulatory filing, the bank said its asset quality was broadly stable on a sequential basis as net additions (slippages net of recoveries and upgrades) to non-performing assets (GNPA) in the April-June quarter (Q1FY22) fell by Rs 8 crore. Restructured book at Rs 686 crore was 1.9% of AUM, which was an increase of 7% over the March quarter, in value). Its assets under management (AUM) shrank by 3% sequentially but were up 22% to Rs 36,635 year-on-year.

On loan growth, the Jaipur-based lender said its gross advances showed a provisional growth of 31% on a year-on-year basis (YoY) to Rs 34,688 crore in the quarter ended on June 30, 2021, from Rs 26,534 crore. Sequentially, the loan book declined 2% to Rs  35,356 crore because there were lower fresh loan disbursals due to weak demand compounded by risk aversion. Disbursements were at Rs 1,896 crore, up 60.5% YoY and down 74.45% over the March quarter.

The 2% sequential fall in loan growth isn’t as significant as expected when even larger lenders like HDFC Bank and Yes Bank have taken a hit due to the second wave-led disruptions. With gradual easing of restrictions, collection efficiency, however, rose to 114% in June from 94% and 95% in May and April, respectively.

While there have been some delays in collections due to localised restrictions and surge in infections during the quarter, the impact of the second wave has been relatively less severe than the first wave of the pandemic when the nation was under a complete lockdown.

On the liquidity front, the bank’s total deposits in the first quarter of FY22 were at Rs 37,014 crore, up 38% from Rs 26,734 crore in the same quarter last fiscal. The deposits were 3% higher from Rs 35,979 crore in the March 2021 quarter. This, the lender said, was primarily led by robust CASA growth of 157% YoY (16% QoQ).

Bajaj Finance books fewer new loans  

In its early Q1FY22, consumer financier Bajaj Finance said it has booked 4.6 million new loans compared to 5.47 million loans booked in the previous quarter, but significantly higher compared to 1.8 million new loans booked in Q1 FY21. The financial services company, however, kicked off the current fiscal on a strong note with a healthy capital adequacy ratio of 28.6% as of June 30, 2021, and a surplus liquidity of Rs  10,900 crore on its balance sheet.

Its deposit book at the end of Q1FY22 stood at Rs 28,000 crore, up 8.51% sequentially and almost 40% YoY.  Assets under management at the end of the June quarter stood at approximately Rs 1.59 lakh crore up 15.2% YoY, and 4.6% sequentially. This includes IPO financing receivable of approximately Rs 2,900 crore, said Bajaj.