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Informist, Monday, Jan. 19, 2026

By Meera Nair

MUMBAI – AU Small Finance Bank Ltd. is expected to report a jump in its December quarter net profit as loan slippages and credit cost are expected to decline sharply, according to brokerages tracking the lender. The brokerages also expect margins to improve from the previous quarter.  

AU Small Finance Bank is expected to report a net profit of INR 6.89 billion for the December quarter, up almost 30% on year, according to the average of estimates from 10 brokerages. Sequentially, the net profit is set to increase almost 23% from INR 5.61 billion.

"We expect NIM to improve ~10 bps qoq, led by term deposit repricing and recent cuts in savings a/c rate," Kotak Institutional Equities said. The net interest margin for the September quarter was up 5 bps at 5.5%. Slippages are expected to decline 8.6% on quarter, Nuvama said. "We expect stronger traction in loan book (as guided by management), and steady deposit growth," according to Elara Capital.

The bank's gross advances were INR 1.25 trillion at the end of the December quarter, up 24% on year and 6.5% sequentially. The bank's gross loan portfolio, which includes securitised/assigned portfolio along with the gross advances, was INR 1.30 trillion on Dec. 31, up 19.3% on year and 5.7% on quarter.

The bank's provisions are expected to be INR 3.96 billion, down over 21% on year and almost 18% sequentially, according to Elara Capital. The bank's provisions and contingencies in the September quarter were INR 4.81 billion.

The bank's net interest income for the December quarter is expected at INR 23.17 billion, up over 14% on year and over 8% on quarter, according to the average of estimates. This is due to robust loan growth. The highest estimate for the company's net interest income is INR 25.68 billion by Mirae Asset Sharekhan Ltd., while the lowest estimate is INR 22.46 billion by Elara Securities (India) Pvt. Ltd. The net interest income was INR 21.44 billion for the September quarter.

The bank's loan slippages are expected to decline sharply and this would reflect in the amount of loans overdue up to 90 days, Kotak Institutional Equities said. AU Small Finance Bank's loan slippages were INR 9.08 billion for the September quarter.

The bank's asset quality is likely to improve for the December quarter, which will help it to reduce provisions and boost overall net profit, according to the estimates. The bank's asset quality worsened in the September quarter with gross non-performing asset ratio rising to 2.41% from 1.95% a year ago. Net non-performing assets were 0.88% of total advances as on Sept. 30, up from 0.75% a year ago but unchanged from a quarter ago.

The bank will detail its earnings Tuesday. Analysts will monitor the bank's 2026-27 (Apr-Mar) earnings guidance.

The bank's shares are up over 29% since its September quarter earnings were reported on Oct 17. Monday, shares of AU Small Finance Bank ended at INR 1,020.95, down 0.43%, on the National Stock Exchange.

Of the nine brokerages' reports on the bank available with Informist, four have a 'buy' rating on the stock with an average target price of INR 910 per share. This is over 10% lower than the current market price. Two brokerages have a 'hold' rating with an average target price of INR 765 per share and three brokerages have a 'sell' rating at an average price of INR 720 per share.

Following are the Oct-Dec earnings estimates for AU Small Finance Bank from 10 brokerage firms in the descending order by the estimate of net profit in INR million:

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Edited by Deepshikha Bhardwaj

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