We remained committed to investing in growth platforms that strengthened our core throughout the fiscal year.
This included focusing on the following areas:
(a) Enhancing our human resources capabilities
(b) Developing new products and solutions tailored to our customer segment, particularly in the realm of secured asset products
(c) Expanding our digital platforms to reach customers through various channels, enhance their experience, and improve operational efficiency
(d) Implementing technology platforms to handle increased business volumes and enhance business efficiencies while maintaining asset quality
(e) Expanding our physical infrastructure by adding 54 new banking outlets, increasing our customer touchpoints through partnerships with payment fintechs, and introducing Money Mitra services.

Hello Ujjivan: A Path-Breaking Initiative Towards Digital Inclusion

We have successfully launched a ground-breaking mobile banking application, Hello Ujjivan, utilising visual, voice, and vernacular elements. This innovative app aims to enhance digital adoption among semi-tech-savvy customers by providing them with convenient access to mobile banking services without extensive assistance. The application offers essential features such as EMI payments, balance checks, and money transfers. However, our ongoing efforts focus on expanding the range of services to include loan applications, with these additions expected to be implemented during FY 2023-24.

FY 2022-23: Delivering on our Promises

At the onset of FY 2022-23, we committed to achieving stability, growth, improved asset quality, and increased profitability. I am delighted to announce that we have successfully delivered on all fronts. Our senior leadership remained steadfast throughout the year, and we expanded our workforce by nearly 1,000 employees, reaching a total of 17,870 by March 31, 2023, compared to 16,895 on March 31, 2022.

As previously mentioned, our business volumes achieved remarkable milestones. One of our key achievements was the significant reduction in our Gross Non-Performing Assets (GNPA) from 7.1% at the beginning of the year to 2.6% at the end of the fiscal. Additionally, our Net Non-Performing Assets (NNPAs) remained at remarkably low levels, ranging from 0.04% to 0.05% over the last three consecutive quarters. Our restructured loan book continued to exhibit healthy collections, now constituting less than 1% of our total gross loan book, with a robust provision cover. Throughout the fiscal year, we experienced only ₹ 335 Crores in fresh GNPA additions, accompanied by upgrades and recoveries amounting to ₹ 506 Crores. We maintained a high provision coverage ratio of 92%, including a floating provision of ₹ 250 Crores, which provided a solid cushion for future earnings. The success of our dynamic collection strategy, incorporating a balanced utilisation of on-roll and off-roll collection teams, multiple agencies, and data analytics, was evident in the improved collection and asset quality during the fiscal year. While slippages began to normalise towards the end of FY 2022-23, we anticipate ongoing bad debt recoveries in FY 2023-24.

During the fiscal year, we successfully raised ₹ 475 Crores of fresh equity through a Qualified Institutional Placement, along with ₹ 300 Crores of quasi-equity in two tranches of sub-debt. These fund-raises and internal accruals significantly bolstered our equity net worth, resulting in a highly favourable capitalisation position as of March 2023. Our capital adequacy ratio stood at 25.8%, with a Tier I capital ratio of 22.7%. Our liquidity coverage ratio (LCR) also stood at 180% as of March 31, 2023.

Outlook

We have established a solid foundation for the future and remain dedicated to further building upon this base. Our focus moving forward will encompass investments in technology and digital platforms to enhance productivity, elevate the customer experience, and drive business growth. Additionally, we plan to allocate increased resources towards branding and marketing efforts to augment brand visibility and reinforce the positive work accomplished over the past six quarters following the COVID-19 pandemic.

In terms of our branch network, we have ambitious plans to add 100 branches during FY 2023-24, including our entry into the state of Andhra Pradesh. We aim to achieve a gross loan book growth rate of 25% or higher. Our strategy involves customer acquisition in the MicroBanking segment and growth in our secured book. While our Housing segment showed robust growth, we anticipate a pickup in the MSME and vehicle sectors during the current fiscal year. In FY 2022-23, the MSME segment underwent a strategic transition towards

In terms of our branch network, we have ambitious plans to add 100 branches during FY 2023-24, including our entry into the state of Andhra Pradesh. We aim to achieve a gross loan book growth rate of 25% or higher. Our strategy involves customer acquisition in the MicroBanking segment and growth in our secured book. While our Housing segment showed robust growth, we anticipate a pickup in the MSME and vehicle sectors during the current fiscal year. In FY 2022-23, the MSME segment underwent a strategic transition towards achieving a more balanced portfolio mix. We have now introduced our first set of products in this segment, with customer log-ins commencing in Q1 FY24. We will also focus on expanding our Micro-LAP (Loan Against Property) book, primarily by promoting the progression of our micro borrowers. Furthermore, a key priority is ccrossselling Vehicle and Gold Loans to micro borrowers.

We anticipate deposit growth of 30% or more, with a particular emphasis on Current Account and Savings Account (CASA) and the expansion of our granular book. We are also focussing on digital deposits, which will be commercially launched early in the current fiscal year. We have made significant investments to make alternative service channels such as Phone Banking, Video Banking, and IBMB (Internet Banking and Mobile Banking) more relevant and productive. These initiatives are expected to yield positive outcomes during the current fiscal year. We aim to maintain credit costs below 100 basis points and achieve a Return on Equity (RoE) of around 22% or higher for FY 2023-24.

The year under review was exceptional in terms of business performance and profitability, providing us with a strong foundation for the years ahead. We are well-positioned to become a leading mass-market bank, serving the rapidly growing aspirational middle class of Indian society.

Sincerely,

Ittira Davis
Managing Director & CEO