Tag: QoQ

AU Small Finance Bank surges 9% after Q1 update, BFSI News, ET BFSI

Banking & Finance

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New Delhi: Shares of AU Small Finance Bank soared 9 per cent in early trade on Tuesday following the June 2021 quarter update by the lender.

The numbers gave a relief to the investors who were expecting a worse impact of the Second Covid Wave on the small finance lenders. The restrictions on mobility and business during the second wave were less stringent than those during the nationwide lockdown.

The gross advances showed a growth of 31 per cent on year-on-year basis (YoY) to Rs 34,688 crore in the quarter ended on June 30, 2021 from Rs 26,534 crore in the June 2020 quarter. The loans in the March 2021 quarter were Rs 35,356 crore.

Shares of AU Small Finance Bank soared 9 per cent to Rs 1,126 on Tuesday at the time of writing this report. BSE Sensex was trading at 52,960.83, up by 83.83 points or 0.15 per cent higher at the same time.

Disbursements in Q1FY22 were at Rs1,896 crore (including Rs 302 crore of ECLGS disbursements) compared to disbursement of Rs 1,181 crore (including Rs 23 crore of ECLGS disbursements) in Q1FY21.

Total Deposits in the bank were Rs 37,014 crore, as of June 30, 2021, 38 per cent higher than the deposits at Rs 26,734 crore on June 30, previous year. The deposits inched up 3 per cent on quarter-on-quarter basis (QoQ).

The small finance bank has delivered over 32 per cent in the year 2021 so far. The counter has soared over 90 per cent in the last one year.

The CASA Ratio stood at 26 per cent in the June 2021 quarter, compared to Rs 14 per cent in the quarter a year ago. Average cost of funds decreased to 6.3 per cent to 7.2 per cent during the period under review.

The global brokerage firm Morgan Stanley is bullish on AU Small Finance Bank. It has maintained an ‘overweight’ stance on the lender with a target price of Rs 1,150. “The AUM growth for the lender is stable on a YoY basis and down 3 per cent QoQ.” it added.



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Axis Bank says collections may slow in the coming weeks, BFSI News, ET BFSI

Banking & Finance

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Axis Bank which swung to profit in the January-March quarter sees collections slowing in the coming weeks as Covid curbs restrict movement.

“We see corporates adopting wait and watch and given the sudden surge, the focus is on employee health and safety. We have not seen any slowdown in early bucket collections, but it is likely to get impacted in the coming weeks because people are not able to meet customers,” Managing Director and Chief Executive Officer Amitabh Chaudhry said. “Our balance sheet is strong and we have taken provisions upfront and have more than decent buffers built in.”

Chaudhry said there will certainly be an impact of the second wave on the economy in the short term but hoped that the wave gets contained quickly with the various strategies being adopted by the government. He said the bank will have to change its policies on risk as per the evolving scenario. He said the bank grew in FY21 as well despite the adversities on the overall economic front and would continue with the same strategy as it believes that the crisis also creates opportunities.

The Q4 results

Beating analyst estimates, Axis Bank reported a net profit of Rs 2680 crore in January-March as compared to a loss of Rs 1,390 crore a year ago. Net interest income rose 11% on year to Rs 7,560 crore, while other income rose 17% at Rs 4,670 crore. Trading income rose nearly three-fold to Rs 790 crore. Axis Bank’s loan book grew 12% on year to Rs 6.4 lakh crore. Domestic loans grew 10% on year, higher than the industry average growth of around 6%.

It disclosed that it had received Rs 3,004 crore of restructuring requests under the special COVID-related window, of which Rs 1,848 crore have been invoked and Rs 623 crore have been implemented.

The bank will take a call on the rest by the June deadline.

The metrics

The total Covid-related provision buffer stood at Rs 5,000 crore (0.8% of loans), while the total additional provision buffer (Covid, standard and restructured) stood at 2% of loans.

Gross slippages were in line with expectations. About 64% of gross slippages were from the retail book. Thus, the annualized retail slippage ratio stood at 3.7%.

The loan book grew 7% sequentially with strong growth across segments. This was led by retail loans growing at 5% sequentially and retail disbursements rising at an all-time high of 44% quarter on quarter (QoQ). Also, the corporate/SME portfolio grew 9%/9%. On the liability front, deposits were up 8% QoQ, led by 13% QoQ growth in CASA deposits; thus, the CASA ratio improved to 45% (quarterly avg. CASA stood at 42%).

Analyst view

Axis Bank has delivered a strong performance and appears well-positioned to report robust earnings traction. Moreover, moderation in fresh slippages, coupled with improved underwriting and an increasing retail mix, would help maintain strong credit cost control. On the business front, retail disbursements reached an all-time high during the quarter, with strong disbursements seen in home loans (+45% QoQ) and LAP (+51% QoQ).

“The bank delivered strong sequential growth across segments. On the asset quality front, total restructuring stood at 0.3% of loans. Furthermore, the bank has an estimated 72% coverage on GNPL and also holds an additional provision buffer of 2% to protect the balance sheet against any potential stress,” Motilal Oswal Securities said in a note.

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SBI Cards Q4 spends point to a worsening Covid impact, BFSI News, ET BFSI

Banking & Finance

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SBI Cards and Payment Services Ltd’s showing a slowdown in business in the fourth quarter, when the new Covid wave was not prominent in India.

The company reported a weak fourth quarter, with a sequential decline in receivables/spending.

The spends

While overall spends rose 11% year on year (YoY) they logged a 5% decline sequentially, within which retail spends were up 13% YoY (-4% QoQ), while corporate spends declined 10% QoQ (flat YoY).

Retail spends remained higher than pre-Covid levels, while corporate spends reached pre-COVID levels – on the back of new use cases making up for the loss in travel spends. Online retail spends form ~52% of the total retail spends.

This development comes when a major rival HDFC Bank is hamstrung as RBI has barred it from issuing new credit cards.

According to the management, spends across categories, barring travel and entertainment, have reached pre-Covid levels. Corporate spends have also reached pre-Covid levels, while corporate travel remains impacted. New use cases across corporates have been making up for the loss in travel spends.

However, the YoY growth is far lower than the pre-pandemic growth trend, which remains a worry.

Also, the gross non-performing assets (GNPA) ratio increased to 4.96% (versus proforma 4.51% in the December quarter), while the NNPA ratio declined to 1.15% (versus 1.58% in the third quarter of FY21).

Total receivables

Total receivables grew 4% YoY (2.5% QoQ decline) to Rs 25110 crore. The receivables mix indicated a marginal increase in the number of transactors and decline in revolvers – resulting in moderation in yields and an impact on the margins. Receivables per card continued to decline, reaching Rs 21,000 crore in the fourth quarter.

With the spends towards essentials are small in size than discretionary, the second wave of the pandemic poses significant risks to growth for SBI Card.

SBI Cards results

SBI Cards reported net profit growth of 110% YoY to Rs 175 crore, which was below analyst estimates. It was affected by a 21% YoY/8% sequential decline in interest income and modest fee income. Although, lower opex supported pre-provision operating profit (PPoP). For FY21, NII (net interest income)/PPOP was up 9.7%/9.6% YoY, while PAT declined ~21% YoY. NII declined 18.3% YoY, with margins down 130bp QoQ to 13.2%. Income from fees and services was stable QoQ at INR11.1b (+16% YoY) as overall spends declined ~5% QoQ. Thus, total income grew 2% YoY to INR22.2b, while opex declined 4.6% QoQ, resulting in stable PPoP (9% miss).

Cards in force grew 12% YoY to 11.8 million. New account sourcing for the fourth quarter stood at 93% of 4QFY20 levels. SBI contributed ~54% to new cards sourced, which accounts for ~44% of the overall card base.

For the financial year ended March 31, total income was at Rs 9,714 crore for FY21 vs Rs 9,752 crore for FY20. The profit after tax came at Rs 985 crore for FY21 versus Rs 1,245 crore in the previous fiscal.

The total balance sheet size as of March 31, 2021, was Rs 27,013 crore as against Rs 25,307 crore as on the same date of last year.



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