AU Small Finance Bank Q4 Results: Profit Falls 12.69% On Higher Provisions

AU Small Finance Bank Ltd.'s standalone net profit declined 12.69% year-on-year in the fourth quarter of financial year 2024, and missed analysts' estimates.

The bank's profit fell to Rs 370.73 crore in the January–March quarter, in comparison with Rs 424.6 crore in the year-ago period, according to an exchange filing on Wednesday. Analysts polled by Bloomberg had estimated a profit of Rs 400.9 crore.

Sequentially, too, the profit was down 1.19%.

Net interest income, or core income, was up 10% year-on-year to Rs 1,337 crore. Other income rose 66.8% to Rs 555.6 crore year-on-year.

Provisions for the quarter-ended March gained over three times by 224% year-on-year to Rs 132.5 crore, as compared with Rs 40.8 crore.

AU SFB Q4 FY24 Earnings Highlights (Standalone)

• Net profit down 12.69% at Rs 370.73 crore vs Rs 424.6 crore (YoY).

• Net interest income up 10% at Rs 1,337 crore vs Rs 1,213 crore (YoY).

• Gross non-performing assets at 1.67% vs 1.98% (QoQ).

• Net NPA at 0.55% vs 0.68% (QoQ).

Asset quality for the lender improved with gross non-performing asset ratio falling 31 basis points to 1.67% quarter-on-quarter. Net NPA ratio also declined 0.55%, from 0.68% in the previous quarter.

In the post-results analysts call, Sanjay Agarwal, MD and CEO of AU Small Finance Bank, said that they expect the asset quality to get stronger over the years. The bank will also continue to grow its balance sheet by 25% annually over the next three years, he said.

The bank's total deposits increased 26% year-on-year to Rs 87,182 crore, from the previous Rs 69,365 crore. CASA deposits, however, were up only about 9% year-on-year to Rs 29,126 crore.

Agarwal added that the current account franchise has not been up to the mark that the bank would've liked. "... we are aspiring to increase CA by 7.5% of the deposits."

For this quarter, the CASA ratio stood at 33%, flat sequentially.

"On merged basis, our endeavour is to protect margins at the overall level," Agarwal said.

On April 1, the merger of AU Small Finance Bank with Fincare Small Finance Bank came into effect.

The development came after the Reserve Bank of India granted its approval for the merger on March 4. With this, all branches of Fincare Small Finance Bank will function as branches of AU Small Finance Bank. 'Fincare Unit' will become the bank's sixth business group.

It's gross advances grew 25% year-on-year to Rs 73,999 crore, as compared with Rs 59,158 crore. The CD ratio stood at 84% of the total advances.

Of this, the vehicle loans contributed 30% and micro business loans contributed 28%, followed by home loans and commercial banking loans to 8% and 25%, respectively.

Agarwal also said that the bank is giving priority to drive branch profitability and hence, it is targeting all asset verticals to improve it by 2027.

However, the bank plans to calibrate its credit card business by moderating issuances to FY24 levels. Hence, it won't be issuing more than 6 lakh credit cards this year, Agarwal said.

According to him, they are expecting more circulars/directions from the regulator on this vertical.