Earnings Review
AU Small Fin Bank PAT down QoQ on stress in microfin book
This story was originally published at 18:21 IST on 22 April 2025
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--AU Small Finance Bank Jan-Mar net profit INR 5.04 bln
--Analysts saw AU Small Finance Bank Jan-Mar net profit at INR 5.03 bln
--AU Small Fin Bk Jan-Mar net profit INR 5.04 bln vs INR 3.71 bln year ago
--AU Small Fin Bk Jan-Mar net profit INR 5.04 bln vs INR 5.28 bln qtr ago
--AU Small Fin Bank gross NPA ratio 2.28% as on Mar 31 vs 2.31% qtr ago
--AU Small Fin Bank net NPA ratio 0.74% as on Mar 31 vs 0.91% qtr ago
--AU Small Fin Bk Jan-Mar total income INR 50.3 bln vs INR 47.3 bln qtr ago
--AU Small Fin Bank Basel-II capital adequacy ratio 20.06% as on Mar 31
--AU Small Fin Bk FY25 net profit INR 21.06 bln vs INR 15.35 bln year ago
--AU Small Fin Bk FY25 total income INR 185.90 bln vs INR 122.52 bln yr ago
--AU Small Fin Bk: Provided INR 170 mln for microfinance book in FY25
--AU Small Finance Bank to pay INR 1 per share dividend
--AU Small Finance Bank Jan-Mar NII INR 20.94 bln, up 4% on quarter
--AU Small Finance Bank Jan-Mar net interest margin at 5.8%
--AU Small Fin Bank provision coverage ratio at 84% as on Mar 31
--AU Small Fin Bk: Total deposits at INR 1.24 tln as on Mar 31, up 10.7% QoQ
--AU Small Fin Bk: Gross loans at INR 1.16 tln as on Mar 31, up 6.2% QoQ
--AU Small Finance Bank: CASA ratio at 29.2% as on Mar 31
--AU Small Fin Bk Jan-Mar fresh slippages INR 8.9 bln vs INR 9.6 bln Oct-Dec
--CONTEXT: AU Small Fin Bank merged with Fincare Small Fin Bank on Apr 1
By Kabir Sharma
MUMBAI – A surge in provisions for the microfinance book led to a sequential decline in AU Small Finance Bank's net profit for the March quarter. AU Small Finance Bank's numbers are not directly comparable to those from a year ago, as it had merged with Fincare Small Finance Bank on Apr. 1.
As brokerages had expected, the bank's net profit fell 4.7% from the Oct-Dec quarter as it had to provide a contingency provision of INR 170 million in the last financial year. The bank reported a bottom line of INR 5.04 billion for the Jan-Mar quarter. This was the first sequential decline in net profit for the bank. Total provisions of the bank rose 26.6% sequentially to INR 6.35 billion.
Despite the stress in the microfinance portfolio, Jan-Mar saw some improvement in the overall asset quality of the bank, with the gross non-performing asset ratio and the net non-performing asset ratio improving to 2.28% and 0.74% from 2.31% and 0.91%, respectively, in Oct-Dec.
The slippage ratio improved to 0.9% in Jan-Mar from 1% in Oct-Dec, led by an improvement in secured assets. Net credit cost for the entire financial year was 1.3% of total average assets. Gross slippages of the bank were slightly lower at INR 8.9 billion in Jan-Mar compared with INR 9.6 billion in Oct-Dec.
The bank made an accelerated provision of INR 1.5 billion in Jan-Mar to strengthen provision coverage, which improved to 84%, including technical write-off and 68% excluding technical write-off. This also weighed on the bank's bottomline.
The net interest income of the bank, its core income, rose 4% on quarter to INR 20.94 billion. Other income rose 23% on quarter to INR 6.18 billion, led by gains in treasury income. Interest expanded at a similar pace to net interest income, rising 4% to INR 20.91 billion.
The bank's total income rose to INR 50.3 billion in Jan-Mar from INR 47.3 billion a quarter ago. The net interest margin declined by 6 bps on quarter to 5.80% for Jan-Mar, primarily on account of asset mix, the bank said.
AU Small Finance Bank's gross loan portfolio stood at INR 1.16 trillion as on Mar. 31, registering sequential growth of 6.2%. "Unsecured businesses de-grew by 10.1% on quarter and 17.6% on year driven by industry-wide deleverage in MFI (microfinance) and corrective actions taken in credit cards," the bank said in its investor presentation. Total deposits of the bank rose 10.7% on quarter to INR 1.24 trillion. The low cost current account savings account ratio was at 29.2% as on Mar. 31.
For 2024-25 (Jan-Mar), the bank's net profit was INR 21.06 billion, compared to the pre-merger profit of INR 15.35 billion a year ago. Total income was INR 185.90 billion in FY25, compared to INR 122.52 billion a year ago.
The Basel-II capital adequacy ratio of the bank was at 20.06% as on Mar. 31. Shares of the bank ended 1.6% lower at INR 613.80 on the National Stock Exchange. End
Edited by Avishek Dutta
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