AU Small Finance Bank Q1 FY27 Results: Net Profit Jumps 37% To ₹796 Crore

AU Small Finance Bank Q1 FY27 Results reflected another quarter of strong operating performance, driven by healthy loan growth, higher deposits and improving profitability. Net interest income (NII) rose 32% year-on-year to ₹2,695 crore, while the net interest margin (NIM) expanded by 47 basis points to 5.9%.

Core other income, excluding treasury income, increased by 33% to ₹680 crore, although total other income declined by 15% to ₹689 crore. Operating expenses rose by 26% to ₹1,949 crore as the bank continued to invest in expansion and technology. However, core pre-provisioning operating profit (PPoP) increased 41% to ₹1,426 crore, while reported PPoP grew 9% to ₹1,435 crore.

Provisions declined 30% year-on-year to ₹371 crore, despite including an additional one-time provision of ₹23 crore to strengthen provisioning for select retail portfolios. As a result, profit after tax (PAT) increased 37% to ₹796 crore, with annualised return on assets (RoA) at 1.7% and return on equity (RoE) at 15.6%.

AU Small Finance Bank Q1 FY27 Business Highlights

The bank continued to expand its balance sheet while maintaining asset quality. Total deposits grew 24% year-on-year to ₹1.58 lakh crore, with CASA deposits rising 22% to ₹45,399 crore. The CASA ratio stood at 29%, while the cost of funds declined by 60 basis points to 6.48%.

Gross loan portfolio increased 23% year-on-year to ₹1.44 lakh crore, supported by 25% growth in secured retail and commercial lending. Unsecured businesses grew 11%, while overall disbursements rose around 42% during the quarter. The bank also maintained a healthy liquidity profile with a liquidity coverage ratio of 119% and a capital adequacy ratio of 18.9%.

Asset quality improved further during the quarter. Slippages declined 22% year-on-year to ₹798 crore, while the gross non-performing asset (GNPA) ratio improved to 2.10% from 2.47% a year ago. Net NPA also declined to 0.76%, and annualised credit cost reduced to 0.8% from 1.4% in the previous year.

How Did The Market React?

Beyond its financial performance, AU Small Finance Bank expanded its distribution network by adding around 130 net touchpoints, including 16 liability branches, taking its reach to over 125 lakh customers.

The company’s stock is likely to be in focus when the market reopens. On 24 July, AU Small Finance Bank's share price ended the day 2.59% higher at ₹1,004 on the National Stock Exchange.

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