Earnings Review
Robust treasury gains help AU Small Fin Bk beat Street view
This story was originally published at 20:59 IST on 19 July 2025
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--AU Small Finance Bank Apr-Jun net profit INR 5.81 bln
--Analysts saw AU Small Finance Bank Apr-Jun net profit at INR 4.92 bln
--AU Small Fin Bk Apr-Jun net profit INR 5.81 bln vs INR 5.03 bln year ago
--AU Small Fin Bk Apr-Jun total income INR 51.89 bln vs INR 42.78 bln yr ago
--AU Small Finance Bk Apr-Jun provisions INR 5.33 bln vs INR 2.83 bln yr ago
--AU Small Finance Bank gross NPA ratio 2.47% as on Jun 30 vs 2.28% qtr ago
--AU Small Finance Bank net NPA ratio 0.88% as on Jun 30 vs 0.74% qtr ago
--AU Small Finance Bank Basel-II capital adequacy ratio 19.42% as on Jun 30
--AU Small Fin Bank Apr-Jun NII INR 20.45 bln vs INR 19.21 bln year ago
--AU Small Fin Bank Apr-Jun other income INR 8.11 bln up 59% on year
--AU Small Fin Bank Apr-Jun net interest margin 5.4% vs 5.8% qtr ago
--AU Small Finance Bank provision coverage ratio at 83% as on Jun 30
--AU Small Finance Bank: CASA ratio at 29.2% as on Jun 30
--AU Small Finance Bank Apr-Jun average liquidity coverage ratio at 123%
--AU Small Fin Bk carries INR 410 mln floating provisions on micro fin book
By Siddhi Chauhan and Pratiksha
MUMBAI – AU Small Finance Bank's net profit for the June quarter beat analysts' consensus estimate on the back of robust growth in the lender's treasury income. The rise in net profit was limited by higher provisions.
The small finance bank's net profit for the quarter rose 15.6% on year and 15.3% on quarter to INR 5.81 billion. A 59.2% rise in other income, driven largely by treasury income, aided the bank's bottom line. In the June quarter, the treasury income soared over 70% to INR 9.80 billion from INR 5.69 billion a year ago. Analysts tracking the bank were expecting it to report a net profit of INR 4.92 bln. Consequently, AU Small Finance Bank's total income rose 21.3% on year to INR 51.89 bln. Sequentially, the total income rose 3.1%.
The provisions maintained in the reporting quarter rose a whopping 89% on year to INR 5.33 billion. However, sequentially they fell 16%. Brokerages tracking the bank had expected provisions to remain high in the reporting quarter owing to stress in the bank's microfinance porfolio. In the June quarter, AU Small Fin Bank made a floating provision of INR 410 mln on its microfinance book.
A seasonal trend and higher slippages in the bank's credit cards portfolio and the secured mortgage portfolio in South India resulted in its overall asset quality deteriorating in the reporting quarter, it said in its investor presentation. The gross non-performing asset ratio rose to 2.47% as of Jun. 30 from 2.28% at the end of March. The net non-performing asset ratio also rose to 0.88% at the end of the June quarter from 0.74% a quarter ago. Analysts had expected the bank's asset quality to remain stable or improve slightly. In Apr-Jun, the bank's slippages rose marginally to 1% from 0.9% in the previous quarter.
The bank's net credit cost on total assets for the June quarter was at 0.34%, up from 0.22% a year ago but down from 0.43% for the March quarter. "Credit cost was slightly higher than our expectations impacted by lower CE (credit enhancement) in MFI (microfinance) and some slippages in south-based mortgages book," the bank said in its presentation.
Net interest income, the core income of the bank, rose 6% on year to INR 20.45 billion in Apr-Jun, lower than analysts' expectations of INR 21.53 billion. The bank's net interest income in Jan-Mar was INR 20.94 billion.
AU Small Finance Bank's provision coverage ratio was 83% as of Jun. 30, against 84% a year ago. Its current account savings account ratio was 29.2% as of Jun. 30, while the cost-of-deposit ratio, after adjusting for loans against which refinance was availed from domestic development finance institutions, was 79% at the end of June.
In Apr-Jun, the small finance bank's average liquidity coverage ratio was 123%, compared to 116% in the previous quarter and 117% a year ago. The lender's Basel-II capital adequacy ratio was at 19.42% as of Jun. 30. Friday, shares of AU Small Finance Bank had closed 0.3% lower at INR 794.90 on the National Stock Exchange. End
Edited by Rajeev Pai
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