Nothing to hide on governance issues: AU Small finance Bank on top-level exits
Bank's gross non-performing assets (NPAs) or the bad loans were 4.3% of the gross advances as on June 30, 2021. The net NPAs were at 2.3%.
Blaming it on “simple HR issues” Jaipur-based AU Small Finance Bank (AU Bank) on Wednesday tried to allay concerns of investors and depositors regarding top level resignations in the recent months.
Concerns over transparency issues were raised due to a lag on part of the bank to make disclosure about the top-level resignations.
Chief Audit Officer Sumit Dhir, due to changes in his personal circumstances following the Covid second wave, has expressed his desire to move back to his hometown in Delhi, on Tuesday. However, the bank is in discussion with Dhir for a possible retention. He was appointed as the Chief Audit Officer (Internal Auditor) of the bank for a period of three years from May 14, 2021 in place of Nitin Gupta.
Gupta had resigned on March 3, 2021 from the post of Chief Audit Officer, the disclosure about which was made on April 30, 2021.
“… He (Sumit Dhir) continues to be on our rolls as Head of Internal Audit and we remain in discussions with him for a possible retention. These retention discussions are as per our usual HR practices and strategy which we follow for the entire senior management team to manage business continuity, confidentiality, and competitiveness. Change in Head of Internal Audit is an internal HR matter and does not require any SEBI disclosure,” the bank said in an official statement on August 31.
Bank’s Chief Risk Officer Alok Gupta has also resigned from the bank citing personal reasons. However, the bank is yet to accept his resignation. Following his resignation, the bank approved appointment of Deepak Jain as the Chief Risk Officer for three years.
Adding to that the bank said that there is not a single other resignation in the top-50 senior management team or the board of directors. The senior management team (top-50 has an average vintage of nearly 6.5 years with AU.
“Some challenges remain around Jaipur location which we are addressing by scaling up Mumbai and other regional offices at key cities (like Delhi, Pune, Indore, Chandigarh etc). We had disclosed this consideration in our Q1 earnings call on 6th August 2021 and AGM on 17th August 2021,” the statement added.
Resignations may risk concerns about sanctity of books
Domestic brokerage firm Emkay Global Financial Services in a note on AU Small Finance Bank said the bank needs to arrest top-level churn and bring more transparency.
In its view, steadily rising asset quality concerns amid the Covid induced disruption, the series of resignations in the audit and risk functions and delayed disclosure of these resignations have irked investors.
Emkay further added that the resignations in audit and risk functions may raise concerns about the sanctity of the books and risk management practices.
Bank’s gross non-performing assets (NPAs) or the bad loans were 4.3% of the gross advances as on June 30, 2021. The net NPAs were at 2.3%.
The lender had posted a net profit of Rs 203 crore in the first quarter ended June of the current fiscal year 2021-22, up 15% from a year ago.
Shares of the company witnessed a sharp decline of 12.64% on Tuesday even as the broader market ended with significant gains.
Shares of AU Bank settled at Rs 1155.15 apiece on BSE, up 2.16% from the previous close on Wednesday.