AU Small Finance Bank announces Bancassurance agreements; stock rises 1%

Shares of AU Small Finance Bank jumped nearly 1 percent in trade on August 7, post the announcement of bancassurance tie-ups with Star Health and Bajaj Allianz Life Insurance.

At 12:37 pm the AU Small Finance Bank stock was trading 0.51 percent higher at Rs 723.05 on NSE.

AU Small Finance Bank has taken a significant step in enhancing its customer services by sealing bancassurance deals with Star Health and Allied Insurance Company, and Bajaj Allianz Life Insurance Company. This move aims to provide health and life insurance solutions to the bank’s customers, creating a one-stop destination for their financial needs, according to a filing with BSE dated September 6.

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These tie-ups will enable the AU Small Finance Bank’s customers to access a wide range of insurance products from Star Health and Bajaj Allianz, the exchange filing detailed further.

Recent Developments in the AU Small Finance Bank

Sanjay Agarwal, MD & CEO, AU Small Finance Bank,  recently explained how systemic growth is likely to remain strong for the bank going ahead and the financial institution is well-positioned to sustain a healthy growth rate of 25-30 percent over the next few years in the 19th Annual Global Investor Conference, organised by Motilal Oswal Services.

Also Read: AU Small Finance Bank well-placed to sustain healthy growth rate: CEO Sanjay Agarwal

Besides concentrating on its core portfolio, AU Small Finance Bank is weighing geographical diversification. The lender will look to strengthen its position in various states and increase its market share from 0.4 percent now.

He further elaborated that the bank it is confident that expanding its book further should not pose difficulties due to its robust foundation with over 41 lakh customers and operations in 21 states and three Union Territories, heightened emphasis on technology, and a solid underlying demand in a market with significant untapped potential.

Brokerage Views

Global brokerage firm Morgan Stanley has assigned an overweight rating to AU Small Finance Bank with a target price of Rs 925 per share, in a report released on September 7. The firm further stated that, “loan growth trends of the bank remain healthy across segments.”

Brokerage firm Motilal Oswal has assigned a ‘buy’ rating with a target price of Rs 825 per share, in a report dated August 17. The firm expects the earnings growth of the bank to accelerate from FY25.

Meanwhile brokerage firm ICICI Securities, in a report dated July 24, assigned a target of Rs 770 per share. The report further stated that, “Credit growth remained robust at 8 percent quarter-on-quarter, driven by strong increases in vehicle loans (up 11 percent), home loans (10 percent), credit card loans (31 percent), and business banking loans (11 percent).”

“However, sluggish growth persisted in Small Business Loans (SBL), Non-Banking Financial Companies (NBFCs), and real estate financing. This indicates a thriving credit market in certain sectors but highlights ongoing challenges in others.”

Stock Performance

AU Small Finance Bank stock has given a return of 13.03 percent over the last six months. The Bank Nifty index has given a return of 6.71 percent over the same duration.

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