AU Small Finance Bank Q2FY26 Net Profit Falls 2% YoY to ₹561 Crore Despite 21% Deposit Growth

Jaipur, October 17, 2025 – The shares of AU Small Finance Bank Ltd closed with a 0.18% gain, as the company reported a consolidated net profit of ₹561 crore in the quarter ended September 30, 2025, which was down 2% year-on-year compared to ₹571 crore in Q2FY25. This slight decline, however, occurred in tandem with higher provisions, despite stable growth in the bank’s deposit and lending franchise.

Key Financial Highlights (Standalone)

In Q2FY26, NII of the bank rose 9% YoY to ₹2,144 crore, a 5% quarter-on-quarter rise from ₹2,045 crore in Q1FY26. This rise was supported by 22% YoY advance growth. Other income rose 12% YoY to ₹713 crore, lower than the previous quarter’s ₹811 crore. Operating expenses grew 11% YoY to ₹1,647 crore, driven by expansion in operations.

Net profit (PAT) decreased modestly by 2% YoY to ₹561 crore and decreased 3% compared with Q1FY26. NIM increased modestly to 5.5%, and the cost of funds decreased to 6.83%. Return ratios remained RoA at 1.4% and RoE at 12.4%, in contrast to 1.7% and 14.5%, respectively, in Q2FY25. On a gross asset quality basis, gross NPA rose to 2.41% and net NPA stayed at 0.88%.

Balance Sheet and Business Growth

Total deposits in AU SFB were ₹1,32,509 crore as of Sep 2025, up by 21% from ₹1,09,693 crore in the previous year. CASA contributed to 29.4%. The gross loan portfolio increased 17% YoY to ₹1,22,877 crore. Retail secured assets (vehicle, mortgage, and gold loans) constituted 67% of total advances. Commercial bank and unsecured loans contributed 21% and 7.6% of the portfolio, respectively, indicating balanced risk management.

Total assets increased 19% YoY to ₹1,65,542 crore and the shareholders’ funds increased by 14% to ₹18,316 crore, reflecting healthy capital growth to support expansion in lending.

Asset Quality and Provisions

Gross NPAs increased marginally to 2.41%, and net NPAs stayed at 0.88%. Provision coverage, including technical write-offs, remained healthy at 84%. Credit cost during the quarter was ₹481 crore, which was 0.30% of average assets, lower than the preceding quarter’s 0.34%, indicating disciplined credit risk control.

Capital Adequacy

Tier-I capital was 18.1%, and total CRAR increased to 20.0%, providing a healthy source of capital to fund the bank’s expansion plans.

Operational Updates

• Universal Bank Transition: AU SFB was the first small finance bank to receive in-principle approval to become a universal bank with an 18-month transition period to establish the holding structure.
• Digital Growth: Approximately 65% of customers have registered on the AU0101 app, with 15.4 lakh monthly transacting users and more than 79 lakh financial transactions in Q2FY26.
• Network Strength: It encompasses 2,626 touchpoints across 21 states and 4 UTs with 707 ATMs and more than 57,700 staff.
• Green Finance: Raised ₹1,354 crore via Green Fixed Deposits, entirely utilised in renewable and clean energy ventures.

Management Commentary

The quarter’s performance was highlighted by management as a testament to resilience amid global volatility and fluctuations in domestic demand. Robust deposit mobilization, rebound in margins, and enhancing asset quality will pave the way for healthy performance in the second half of FY26.

REF: https://nsearchives.nseindia.com/corporate/SUMIT1_17102025160427_Investor_Presentation_Disclosure.pdf

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