Whole-Time Director’s Message

Building a strong foundation

‘‘FY 2019-20 was another year of sound performance, where we expanded our outreach to 647 touchpoints, grew our disbursements by ~16% to ` 18,634 crore and, in turn, grew our AUM by 27% to ` 30,893 crore.’’

– UTTAM TIBREWAL

As AU turns 25, I express my gratitude to all those who have been with us in this journey – customers, employees, investors, lenders, vendors and our esteemed regulators. Achieving this milestone would not have been possible without your trust, support and guidance.

DEAR STAKEHOLDERS,

FY 2019-20 was third year of our operations as a Bank. I am pleased to share that despite several challenges including the unexpected emergency imposed by COVID-19, our overall performance has remained satisfactory. Concerns over the health of the financial sector intensified due to moratorium placed on deposits withdrawal for a co-operative Bank and then a private Bank. Consumer demand, which had already been subdued due to a continued slowdown in overall economic activity, was significantly exacerbated by the onslaught of COVID-19, and the situation continues to remain fluid. Despite these challenges, we delivered a satisfactory financial performance. We have always emphasised on growing based on our strengths, consistent operational performance and optimal utilisation of capital and funding sources. We are now one of India’s fastest growing and progressive SFBs with best-in-class asset quality and a steadily growing liability franchise.

As AU turns 25, I express my gratitude to all those who have been with us in this journey – customers, employees, investors, lenders, vendors and our esteemed regulators. Achieving this milestone would not have been possible without your trust, support and guidance.

Looking back, I feel proud of what we have achieved in our journey so far. However, I believe this is merely the beginning of even better things to come. Our confidence stems from the fact that first as an NBFC and then as a Bank, we have successfully navigated through many economic cycles and, over the years, we have been able to build a sustainable growing platform founded on some key first principles.

These principles include a focus on primarily financing secured and small ticket loans, which aid income generation, pricing the risk appropriately and contiguous expansion. A key strength is our deeply rooted vintage leadership team, who is well connected to the ground reality in their respective domains. This, along with our agile-minded staff, helps to quickly and accurately relay intelligence regarding changes in our ground environment to key decision makers, subsequent quick decision-making and speedy execution of these changes. This gives us considerable flexibility to quickly capture emerging opportunities and preempt rising risks.

FY 2019-20 was another year of sound performance, where we expanded our outreach to 647 touchpoints, grew our disbursements by ~16% (to `18,634 crore) and, in turn, grew our Assets Under Management (AUM) by 27% to `30,893 crore. Notably, our disbursement growth was negatively impacted as we effectively could not disburse in the last 10 days of March (which is typically the busiest month) due to the emergence of COVID-19. We achieved a balance sheet size of ` 42,143 crore. It was the power of the Bank’s platform that helped us expand our balance sheet ~4.3 times in a short span of three years as a Bank. We are overwhelmed with the customer confidence and look forward to the countless opportunities before us in the coming years.

REAPING BENEFITS OF A CALIBRATED GROWTH STRATEGY
One key reason for our higher growth and profitability relative to several peers is due to our ability to adapt quickly to our environment. For instance, we were able to quickly act upon the opportunity in used vehicles financing by rapidly expanding our used car dealer network and aligning our resources in that direction. Notably, we are probably the one of the fewest early lenders to have successfully built a scalable business model in the used vehicle financing market by formalising the connect with the used vehicle ecosystem, similar to what we have in place in new vehicles financing. This helped us counterbalance the impact of the continued slowdown in new car sales. We have been able to successfully grow our Small Business Loan (SBL) book, which caters to the underserved informal MSME segment, and this remains a key growth driver for us. Overall, our agile approach, and our focus on building a granular, secured assets portfolio has helped us build a healthy balance sheet and gain market share.

‘‘We aspire to build an outstanding Banking franchise and our belief is that customer delight and trust are central to this. To deliver best-in- class services to our customers, it is essential that we understand their expectations and remain honest, agile and true to our overarching mission of building one of India’s largest retail banking franchises.’’

LAYING THE RIGHT FOUNDATION
At AU Bank, becoming a highly trusted custodian of public deposits, continuing to retain the faith of regulators and stakeholders and remaining compliant with the regulatory and policy guidelines, are of paramount importance to our success. We are offering some of the best asset and liability products in the industry, and that too within 36 months of commencement of our operations. Consequently, every month we are adding on an average 50,000 to 60,000 customers. As on 31st March 2020, we had around 17 lakh customers. We remain focused on using analytics to leverage our experience and knowledge acquired over several years, given our long presence in several geographies prior to branch opening. We believe this approach helps us to reach out to customers more efficiently, and serve them holistically.

FOCUSING ON CUSTOMER DELIGHT AND TRUST
We aspire to build an outstanding banking franchise and we believe that customer delight and trust are central to this. To deliver best-inclass services to our customers, it is essential that we understand their expectations and remain honest, agile and true to our overarching mission of building one of India’s largest retail banking franchises. Our strategy is to consistently meet customers’ expectations with a balanced and consistent approach. Our endeavour is that every existing and prospective customer, who gets in touch with us via any channel, should be delighted, and each interaction should enhance their trust in the AU brand.

In FY 2019-20, we have taken several measures to enhance the value proposition of our deposits franchise. We have launched AU Royale in Q3FY20 — a best-in-class Savings Account product, aimed at tapping a much broader client base, where similar offerings are missing for the millennials, and mass affluent customers across all our branches. The product has received a very positive response from customers so far, and we expect it to gain traction with time.

‘PHYGITAL’ DISTRIBUTION REMAINS A KEY FOCUS
We believe that a strong physical presence of branches, supported by customised, easy digital banking solution, is the way forward for banking. On the back of this belief, we are providing a unique proposition for our customers — we are facilitating their digital engagement, while maintaining our personalised connect with them. Our focus is to deliver a seamless omni-channel integrated solution that will ensure consistent high-level customer experience across all channels (branch banking, website, internet banking, mobile applications). This will ensure that we scale our operations faster and profitably, while maintaining consistency in services.

At AU Bank, becoming a highly trusted custodian of public deposits, continuing to retain the faith of regulators and stakeholders, and remaining compliant with the regulatory and policy guidelines are of paramount importance to our success.

During FY 2019-20, we have taken several technology initiatives. We included the analytics model to estimate the disposable income of the customer. We have introduced paperless onboarding for the Deposit customer with live digital account opening flows for Current account, Saving account and FDs. We went live with E Mandate, ASBA, and Bharat Bill Payment System. Being a new-generation modern Bank with no legacy issues allows us to leverage the benefits of technology to offer low-cost solution to our customers.

We are also putting to use 360° communication across multiple digital and social media platforms to create impactful brand awareness. In FY 2019-20, we continued to strengthen brand engagement with our first ever digital brand campaign — #BharosaApnoJaisa, delivering over 12 crore brand impressions and more than 5 crore video views amongst the users across digital and social media channels. We are positive that these steps will help enhance our productivity, profitability and outreach and we will continue to build a technology led, customer-centric, Retail banking franchise.

FUTURE GROWTH PILLARS
As we look towards the future, the pillars for growth include:

We are on the right path to grow responsibly and sustainably to create value for all of our stakeholders. I covey my sincere thanks to the RBI, SEBI and other regulators and our Board members, AU customers, team members and all other stakeholders for supporting us in our journey of growth.

Be Safe, Go Digital!

Regards,
UTTAM TIBREWAL