Au Small Finance Limited

General overview:
AU Small Finance Bank Limited is an Indian Small finance bank, based in Jaipur, India. It was
founded as vehicle finance company AU Financiers (India) Ltd in 1996 and later converted to
a small finance bank. AU Small Finance Bank serves mostly middle income individuals and
micro and small businesses that have limited or no access to formal banking and finance
channels. The Bank offers loans, deposits and payment products and services.

Shareholding Pattern - Au Small Finance Bank Ltd.

Holder's Name % Share Holding

No of Shares 100%

Promoters 26.75%

Foreign Institutions 35.94%

Banks Mutual Funds 11.83%

Others 7.2%

General Public 10.28%

Financial Institutions 8%

Management of the company:

Sanjay Agrawal is the CEO of the company for 20 years A merit holder Chartered Accountant
and a first generation entrepreneur, he holds ~28.5% stake in the Bank. He is supported by a
team of 23,486 employees. The bank is professionally operated. Apart from Sanjay, Mr. Raj
Vikash Verma, Part-time Chairman & Independent Director and Mr. H. R. Khan - Independent
Director are also a part of the board of directors.
SWOT Analysis of the company:
Strengths of AU Bank
Healthy Customer Base: In 2017, AU Bank had a total of 280,349 active loan accounts and
has been growing ever since
Broad Range of Portfolio: One biggest strength that AU Bank has is that it offers a wide range
of financial and consulting services to its customers ranging from investment banking, asset
management, private banking and insurance, which give it an edge among other Small
Finance Banks.
Strong Brand Recognition: AU Bank’s products and services are highly recognized in the
consumer financial services industry for the last 25+ years. This allowed the company to
charge a premium compared to its competitors in the consumer financial services industry.
Government Support: In November 2017, the Reserve Bank of India added the bank to its
list of commercial banks, reducing the cost of short-term funding and improving the ability
of banks to serve, further enhancing the bank’s growth prospects.

Weaknesses of AU Bank
The weaknesses are the negative points on which the brand must improve upon. For AU
Bank, the following are its weaknesses:

Not in Country’s Leading: Due to its majority of income coming from loans, retail and
personal banking only, it somehow lags in presence in India and other continents compared
to leading Indian banks.
Declining Market Share: This is due to the consumer financial services industry growing at a
faster rate than the company. In such a scenario, AU Bank needs to carefully analyze various
trends within the financial sector to understand what to do to drive future growth.
Rising Interest Risk: As the company is primarily wholesale-funded, rising interest rates can
negatively impact borrowing costs and thus profitability.

Opportunities for AU Bank

Opportunities are external elements that are in favour of the company and the firm can use
it to its advantage to grow. The opportunities of AU Bank are given below

Advancements in Technology in the Banking Sector: The banking industry has always
functioned based on technology. AU Bank is known for its best-in-class user-friendly digital
 banking offerings. Thus, AU Bank should continue to adopt the latest technological
advances.
Growth Potential: AU Bank operates in under-penetrated sectors such as vehicle finance and
small enterprise finances which offers it strong growth potential.
Expanding the Customer Base in Upper Segments: As customers must move from
unorganized operators in the financial sector to licensed players, AU Small Finance Bank has
the opportunity to enter the entry-level market.
Global Opportunities for AU Bank: A major opportunity for financial service players in the
Indian market is the global financial service market, it is inarguably that the global market is
worth billions of dollars. AU Bank is mainly focused on the Indian market, which needs to
increase its reach outside the Indian market as well making it gain more customers.

Threats to AU Bank
Shortage of Skilled Human Resources: Given the high turnover rate of employees and the
increasing reliance on innovative solutions, AU Bank may face challenges in this sector soon.
Regulatory Requirements: After transforming into a small bank, AU Bank must meet several
regulatory requirements such as CRR, SLR and higher priority sector lending, which may
negatively impact its operating performance during the initial three years of operation.

Competitive Analysis:

Name Last Price Market Cap. Net Interest Net Profit Total Assets
(Rs. cr.) Income

2,068,535.05
HDFC Bank 1,660.95 926,271.19 127,753.11 36,961.33

IndusInd Bank 1,202.45 93,239.78 30,822.44 4,611.12 401,974.57

AU small finance 616.35 41,080.47 5,921.73 1,129.83 69,077.80

Conclusion and way forward with the company:
AU Bank is a leading name in the small finance banking industry. In our SWOT Analysis of AU
Bank, we can see how it is reliant on its strong relationships with customers and innovation
in its products. AU Bank has to consider its competitors to maintain its position in the
market.

One way in which AU Bank has an opportunity to tap into potential customers is by
increasing its focus on its digital presence by using various digital marketing methods. Since
the future is digital, there is an increasing need to have relevant knowledge and skills.