AU Small Finance Bank Q3 Results Review - Core Income Growth, Asset Quality Remains Strong: Yes Securities

Yes Securities Report

AU Small Finance Bank Ltd. delivered a stronger performance over expectations set by the pre-quarter disclosures. Adjusted for the lower priority sector lending income, there was a pre-provision operating profit/profit after tax beat of 5- 6%/10-11% respectively.

Notably, bad debts recovery and the quantum of contingency/restructuring provisions utilisation/reversal was higher in this quarter. At the core, growth in net interest income and opex was in-line with expectations, while fee growth and asset quality trends were stronger.

Resilient net interest margin, improving core fee yield, mild moderation in cost/income ratio and modest credit cost underpinned robust return on asset/return on equity (2%/15%) performance.

Our FY23/24 earnings estimates underwent mild upgrades.

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