AU Small Finance Bank Ltd Q3 2021 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Vivek Ramakrishnan - DSP Mutual Fund - Analyst : My question actually was also on cost to income only. Is there some way where you quantified the cost to income on mature branches versus -- I know you've been in the business only for a few years now, versus the branches you're setting up, in the sense, where would the trend line become over, let's say, the next 5 years?

Question: Vivek Ramakrishnan - DSP Mutual Fund - Analyst : Excellent, sir. Sir, could you also just help us with your Wheels business in terms of how the trends are going? Because amongst all your business, in terms of either full and part collection is one of the lower numbers, given the pickup in economic activity, and is there a trend that you're seeing in January that's better than December? That's my last question.

Question: Vivek Ramakrishnan - DSP Mutual Fund - Analyst : It was in respect to collection only, in terms of -- it showed 81% as full collection, 6% as part collection. That is, amongst your businesses, the lower of the numbers. So I just wanted to see how the trend is going in January. And what are the factors impacting it?

Question: Vivek Ramakrishnan - DSP Mutual Fund - Analyst : Okay. It's just that if more number of customers get activated at this, I'd assume even the collection is presumably going to go over 100%, which we're already seeing.

Question: Bhavik Dave - Nippon India Mutual Fund - Analyst : Sir, my -- I have a couple of questions, one is on the asset quality. Could you just mention what would be our normalized customer activation rate when it comes to Wheels business, which is at around 82%? What is the number -- 81%, sorry, full payment. What is the number like in a normal case of business, like in a pre-COVID level? If you can talk about...

Question: Bhavik Dave - Nippon India Mutual Fund - Analyst : Sure. And sir, secondly, on the slippages that we saw this quarter, do we -- is it fair to assume that next quarter onwards, this number should like dramatically come off or be similar to what we were reporting like in that INR 100 crore-odd range, INR 150 crore slippages that you used to report quarterly? Should we trend back to that level? So this would be the peak of slippages?

Question: Bhavik Dave - Nippon India Mutual Fund - Analyst : Yes. Yes. So yes, that INR 1,000 crore number should be somewhere around maybe 5% over and above this INR 1,000 crore. Is that a fair assumption?

Question: Bhavik Dave - Nippon India Mutual Fund - Analyst : So all right. What I'm trying to understand is that INR 700 crores that got slipped during the quarter. And if this year-long period average is to be around INR 150 crores to INR 140-odd crores, should we assume that the INR 750 crores can now -- next quarter onwards, we now see INR 500 crores, INR 600 crore kind of addition towards GNPA?

Question: Bhavik Dave - Nippon India Mutual Fund - Analyst : Yes. That is what I was trying to...

Question: Bhavik Dave - Nippon India Mutual Fund - Analyst : Yes. So next quarter, it will be broadly INR 100 crore, INR 120-odd crore.

Question: Bhavik Dave - Nippon India Mutual Fund - Analyst : Okay. Okay. Understood. Okay. Understood. Understood. And sir, finally, on the credit cost front, this quarter, again, like similar question on the credit cost, this should be like the peak. And now the credit cost from here on, from next quarter onwards, should be broadly similar to what you REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2021 / 4:00AM, AUFI.NS - Q3 2021 AU Small Finance Bank Ltd Earnings Call were reporting pre-COVID, right? Like that 30, 40 basis point of average assets should be our credit cost for next -- going forward, next quarter onwards?

Question: Bhavik Dave - Nippon India Mutual Fund - Analyst : Sure. Understood. And sir, secondly, on the business front, on the cost front, we've seen like -- like you rightly mentioned that we are investing in our businesses. If you could just talk about -- and we've done a very, very, very good job on -- when it comes to technology and tie-ups with digital platforms. I just wanted to understand how -- what is the kind of investments that we are doing on the technology front and building these apps and tying up with these Flipkarts and Amazons of the world? How does the economics work there? What do we get out of it? If you could just talk about that because that is quite interesting.

Question: Bhavik Dave - Nippon India Mutual Fund - Analyst : All right. Okay. Understood. And sir -- yes. And last question is on the deposit front. Sir, just wanted to understand because you -- one line you've mentioned on the presentation is that because of these tie-ups and more active customers, our balances are increasing amongst those customers. So if you could just throw some light on, if we were to compare like customers who are active on these platforms versus customers who are not, what is the kind of differential on deposits? Like how -- what metric are you tracking to see that is helping us improving our deposit franchise? Shoorveer, sir, if could talk about that.

Question: Vikram Raghavan - Moon Capital - Analyst : Just continuing the question on ECLGS. Is there any color on the end use of credit? What percentage is used to retire other debt and what is used for fresh funding needs of entrepreneurs? And what is the target for the ECLGS? My second question is regarding capital raising plans. When will it happen and what size is targeted?