AU Small Finance Bank Shares Tumble Over 11% After Q3 Profit, Asset Quality Declines

Shares of AU Small Finance Bank Ltd. tumbled over 11% on Monday after its profit fell in the third quarter of fiscal 2024, due to higher provisions.

The lender's standalone net profit declined 4.5% year-on-year to Rs 375.3 crore in the quarter ended December 2023, according to an exchange filing.

Net NPA rose 0.68% from 0.60% in the previous quarter. The bank reported a mixed quarter as higher provisions dragged down net earnings even as fee/deposit growth stood healthy, according to Motilal Oswal Financial Services Ltd.

"Asset quality deteriorated in 3Q, while margins continued to compress and stood at the lower end of the guided range. On the business front, disbursement growth was healthy; however, high securitisation affected the growth rate of on-balance sheet advances," it said.

AU Small Finance Bank Q3 Earnings FY24 (Standalone)

• NII up 15.3% at Rs 1,329.4 crore. (YoY).

• Net profit down 4.5% at Rs 375.3 crore. (YoY).

• Gross NPA at 1.98% vs 1.91% (QoQ).

• Net NPA at 0.68% vs 0.60% (QoQ).

Shares of AU Small Finance Bank plunged 11.80%, the lowest level since April 10, 2023, before paring loss to trade 9.18% lower at 11:01 a.m. This compares to a 1.28% advance in the NSE Nifty 50.

The stock was the only one that fell among Nifty Bank constituents. It has risen 6.16% in the last 12 months. Total traded volume so far in the day stood at 16 times its 30-day average. The relative strength index was at 27.7, indicating that the stock may be oversold.

Of the 27 analysts tracking the company, 10 maintain a 'buy' rating, seven recommend a 'hold', and 10 suggest a 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 15.6%.