AU Small Finance Bank expects its vehicle loan book to grow 20-25% in the current financial year.
“With the merger with Fincare Small Finance Bank taking effect in April, we have an opportunity (for growth) in the wheels segment,” Bhaskar Karkera, head of retail assets, said. “Traditionally, yields on housing loans are lower, so we want to do more of wheels to balance out growth.”
The bank plans to utilise the branch network of Fincare SFB in South India to expand the vehicle loan book. Currently, the bank has a 9% market share in financing Mahindra & Mahindra vehicles and an around 5% market share with Maruti Suzuki.
“While gaining market share from new states will take some time, we will be able to offer the same value proposition in newer states as well. That will help us scale up,” Karkera said.
Overall retail assets of the bank stood at Rs 48,915 crore as on March 31. This includes the wheels segment, micro business loans and affordable housing loans. The average ticket size of these loans is Rs 10 lakh. Around 63% of advances are concentrated in Rajasthan, Madhya Pradesh and Maharasthra.
The wheels and micro business loan segments constitute nearly 88% of the retail business. Around 40% of the wheels portfolio comprises used-vehicle loans.
In its analyst presentation in March, the bank said it would gain access to more than 130 branches of Fincare SFB. While the bank does not plan to add any branch in FY25, it will hire 1,000-1,500 employees for retail loans.