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Motilal Oswal Report
AU Small Finance Bank Ltd.'s Q1 FY21 earnings were strong, led by higher treasury gains (including the Aavas stake sale) and sharp decline in opex.
The bank prudently utilized gains to create higher provisions (Rs 1.4 billion), thus taking the total Covid-19 related provisions to Rs 2.8 billion. Overdue loans declined to Rs 11.3 billion (4.3% of loans) while complete moratorium book decreased to 11% (versus 25% as at April 2020).
On the business front, while loan growth moderated, margins saw steep decline of approximately 50 basis point, impacted by excess liquidity.
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