AU Small Finance Bank – Reorganises Itself Into 10 SBUs To Ensure Sustainability, Scalability: ICICI Securities


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Recognising the massive structural growth opportunity across segments, AU Small Finance Bank Ltd. has reorganised itself into 10 strategic business units to ensure sustainability and scalability.

With this backdrop, AU hosted an event to discuss key strategic priorities for two of its SBUs: commercial banking (~19% of advances), and secured business loans (~33% of advances).

The successful scale-up of SBL book, as reflected in its 51% compound annual growth rate during FY12- FY22 with gross non-performing loan of 2.7% as of Sep-22, is an outcome of AU’s cashflow-based secured lending with focus on new to bank/new to credit customers, local teams for sourcing given state- / district-wise diversity in India, in-house technical and legal teams with vintage of more than four years, and highly motivated collections team.

Preference for higher contribution from customers (loan-to-value at 46%) and self-occupied properties (~85%), 100% dual legal check, focus on acquiring quality customers (~68% of SBL book is towards customers having CIBIL score 700 and above), and in-house sourcing at 73% has ensured steady asset quality in the SBL segment for almost a decade.

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