AU Small Finance Bank reported a 52.9% year-on-year jump in standalone net profit for the September quarter, supported by strong growth in net interest income, lower provisions and an improvement in asset quality.
Net profit rose to Rs 858 crore in Q2 FY27 from Rs 561 crore in the corresponding quarter last year, the bank said in a press release on Saturday. Net interest income (NII) increased 31.5% to Rs 2,820 crore from Rs 2,144 crore a year ago.
The bank's operating profit grew 25% year-on-year to Rs 1,514 crore from Rs 1,210 crore. Core pre-provisioning operating profit (PPoP), which excludes certain income and expenses, rose 31% to Rs 1,480 crore.
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The bank's net interest margin (NIM) expanded 33 basis points year-on-year to 5.8% in the September quarter, compared with 5.5% a year earlier. Its cost of funds declined to 6.41% from 6.83%, helping support interest income growth despite a 27-basis-point decline in gross advance yields.
Core other income increased 16% to Rs 736 crore, driven by business growth, credit card issuances and transaction banking fees.
Net provisions fell 25% year-on-year to Rs 359 crore from Rs 481 crore in the year-ago quarter. Credit cost, including guarantee premium, declined to 0.8% from 1.2%.
The bank's return on assets stood at 1.7%, while return on equity improved to 16.1% in Q2 FY27, compared with 1.4% and 12.4%, respectively, a year earlier.
Asset quality indicators improved on a year-on-year basis. Gross non-performing assets (GNPA) declined to 1.99% of gross advances at the end of September from 2.41% a year earlier. The ratio was 2.10% in the June quarter.
Net non-performing assets (NNPA) fell to 0.81% from 0.88% a year earlier, although the ratio edged up from 0.76% in the previous quarter. The provision coverage ratio stood at 83%, including technical write-offs.
The bank's total deposits rose 28.6% year-on-year to Rs 1.70 lakh crore, while its gross loan portfolio expanded 25.1% to Rs 1.54 lakh crore. Gross advances increased 27.9% to Rs 1.50 lakh crore.
CASA deposits, comprising current and savings accounts, grew 29.1% to Rs 50,289 crore, taking the CASA ratio to 29.5%. The bank said stable deposits accounted for 79% of its total deposit base.
During the quarter, AU Small Finance Bank added 183 net touchpoints, including 45 liability branches and more than 100 asset centres. It had 3,103 touchpoints across 21 states and four Union Territories, serving over 1.28 crore customers.
For the first half of FY27, net profit rose 45% year-on-year to Rs 1,654 crore, while NII increased 32% to Rs 5,516 crore.
Commenting on the results, Managing Director and CEO Sanjay Agarwal said the bank's performance reflected a balance between growth, profitability and prudence. He added that the lender would continue to focus on customer interests, governance and investments in capabilities to support sustainable long-term growth.
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