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Informist, Wednesday, Jul. 22, 2026

 

By Diksha Tripathy 

 

MUMBAI – AU Small Finance Bank Ltd. is set to report robust on-year growth in net profit for the June quarter on the back of a sharp rise in total advances, according to brokerages tracking the bank. A fall in provisions during the quarter is also expected to support growth in net profit.

 

The small finance bank is estimated to post a net profit of INR 7.97 billion for the June quarter, up over 37% on year, but down over 4% on quarter, according to an average of estimates from 10 brokerages. The highest net profit estimate is INR 9.18 billion from Kotak Securities Ltd. and the lowest is INR 7.16 billion from YES Securities (India) Ltd.

 

AU Small Finance Bank's gross advances rose 26% on year to INR 1.4 trillion as of Jun. 30, according to provisional data. Total deposits were up over 23% on year to INR 1.57 trillion. The current account savings account deposits ratio was at 28.8% as of Jun. 30, up from 28.4% a quarter ago.

 

Motilal Oswal Financial Services Ltd. expects the growth in advances to exceed provisional estimates given by the bank. "Advances growth is expected to remain at 29% YoY (year-on-year), led by wheels, commercial banking, gold and unsecured segment," the brokerage said.

 

The bank's net interest income is expected to rise 31% on year to INR 26.84 billion for the June quarter. Sequentially, the net interest income is expected to rise nearly 4%. The highest estimate for net interest income is INR 27.60 billion from Bank of America Global Research and the lowest is INR 26.15 billion from YES Securities Ltd. For the March quarter, AU Small Finance Bank had posted a net interest income of INR 25.82 billion, up over 23% on year.

 

The net interest margin of the bank is likely to decline 10-18 basis points for the June quarter due to hikes in interest rates on savings accounts and term deposits, brokerages said. The net interest margin had expanded to 5.96% in the March quarter from 5.70% in the previous quarter.

 

Most brokerages expect the asset quality of the bank to remain stable with easing pain in unsecured segments. Though credit costs might see a seasonal inch-up amid tax-related outflows scheduled in the first quarter, it is still expected to remain below 1%, Motilal Oswal said.

 

The bank's cost-to-income ratio is expected to remain high in the near term amid focus on opening new branches and transition to a universal bank. Market participants will closely track the bank's commentary on its transition and capital raise in the financial year 2026-27 (Apr-Mar). In 2025, AU Small Finance Bank had received in-principle approval from the Reserve Bank of India to transition into a universal bank.

 

AU Small Finance Bank will detail its June quarter earnings Saturday. The stock is down nearly 4% since the bank announced its March quarter results on Apr. 27.

 

Of the 12 brokerage reports on the company available with Informist, six have a "buy" recommendation on the stock with an average target price of INR 1,162 per share. This is over 12% higher than the current market price. Three brokerages have a "hold" recommendation while the rest recommend "sell".

 

Following are the Apr-Jun earnings estimates, in INR billion, for AU Small Finance Bank from 10 brokerages, in descending order of net profit estimate:

 

Brokerage	NII	Net profit
Kotak Securities Ltd.	26.88	9.18
JM Financial Institutional Securities Pvt. Ltd.	27.50	9.00
Nuvama Wealth Management Ltd.	26.85	8.47
ICICI Securities Ltd.	26.60	8.17
Elara Securities (India) Pvt. Ltd.	26.85	7.75
Nomura Equity Research	26.40	7.70
Motilal Oswal Financial Services Ltd.	27.16	7.51
Nirmal Bang Equities Pvt. Ltd.	26.38	7.45
Bank of America Global Research	27.60	7.31
YES Securities (India) Ltd.	26.15	7.16
Average	26.84	7.97

 

End

 

Edited by Shubhayan Bhattacharya

 

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