AU Small Finance Bank - Showcasing Liability Strength: ICICI Securities
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ICICI Securities Report
AU Small Finance Bank Ltd. showcasing its improved liability franchise, reduced saving deposits rate by ~100 basis points in select buckets, while it kept entry-level savings account rate (less than Rs 0.1 million deposits) unchanged at 3.5%, amid concerns around asset quality due to resurgence of Covid-19 cases given its higher exposure to vulnerable segments like small and medium enterprise and vehicle.
The proposed SA rate cut would help the bank further improve its cost of funds and retail deposit share.
In FY21, overall cost of funds fell by 86 basis points to 6.83% from 7.69% in FY20.
Incremental cost of fund in FY21 remained at a much lower level of 5.9%, likely to come down further with proposed rate cut.
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