AU Small Finance Bank Q1 net profit falls 4 pc sequentially
New Delhi, July 25
AU Small Finance Bank on Saturday reported a 4.3 per cent sequential decline in its net profit for the first quarter of FY27, according to the bank's filing.
However, on a year-on-year basis, the bank's net profit rose 37 per cent, supported by strong growth in net interest income (NII).
The bank's net profit stood at Rs 795.95 crore (Rs 79,595.29 lakh) in the April-June quarter, compared with Rs 831.87 crore (Rs 83,186.95 lakh) in the preceding January-March quarter.
On a year-on-year basis, net profit increased from Rs 581 crore in the corresponding quarter of the previous financial year.
Net interest income (NII), the difference between interest earned and interest expended, rose 31.9 per cent year-on-year to Rs 2,696 crore during the quarter from Rs 2,044 crore a year earlier.
Operating profit grew 9.4 per cent year-on-year to Rs 1,435 crore in the reporting quarter, compared with Rs 1,312 crore in Q1 FY26.
The bank's provisions declined 30.4 per cent year-on-year to Rs 371 crore from Rs 533 crore in the corresponding quarter last fiscal, reflecting lower credit costs.
On the asset quality front, gross non-performing assets (GNPA) stood at 2.10 per cent as of June 30, compared with 2.03 per cent at the end of the March quarter.
Net non-performing assets (NNPA) also edged up to 0.76 per cent from 0.74 per cent sequentially.
Shares of AU Small Finance Bank settled at Rs 1,002.25 on the NSE on Friday. The stock has touched a 52-week high of Rs 1,090.40 and a 52-week low of Rs 682.50.
The bank's shares have underperformed the broader market in recent weeks.
The stock has declined 2.68 per cent over the past week, 6.54 per cent in the last two weeks, 6.11 per cent over one month and 5.95 per cent over the past three months.
In comparison, BSE Sensex fell 1.95 per cent over the past two weeks and 1.21 per cent over one month, indicating the bank's shares underperformed the benchmark over these periods.
— IANS
Reader Comments
Interesting to see the NII growth nearly 32% YoY, and operating profit up 9%. But the stock is down 6% in a month — that seems like an opportunity if you believe in the long-term story. The GNPA uptick to 2.10% from 2.03% is tiny, but any increase in NPAs is not good for a small finance bank. Let's hope it's temporary.
I have been tracking AU Bank for a while. This Q1 result is a bit of a mixed bag. The sequential dip is because of higher operating expenses or maybe some one-offs? But the YoY numbers are solid. The provisions coming down is very good for margins. The stock has corrected from highs, might be a good entry point for long-term. Let's see how they manage asset quality.
It's concerning that profit fell sequentially, but the YoY jump of 37% is impressive. The NII growth of 31.9% shows strong core lending activity. Asset quality has inched up slightly, but 2.10% GNPA is still manageable for a small finance bank that focuses on microfinance and small loans. The share price decline seems like a temporary correction given the broader market weakness.
As an investor, I'm watching AU Bank closely. The 30% drop in provisions is good, but the small rise in NPA ratios is a worry. Also, the stock has fallen more than the Sensex over the last month, which shows lack of confidence. Maybe the market is pricing in more bad news ahead? I would wait for next quarter before adding more.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.