AU Small Finance Bank Q2 PAT up 23% YoY as asset quality improves

AU Small Finance Bank’s Q2 FY23 net profit increased 23% y-o-y and 28% y-o-y to ₹343 crore on strong loan growth and improvement asset quality.

“The bank continued to make progress on all key metrics, from CASA deposit mobilization, credit growth, acquisition and engagement in digital products, increased profitability and margins or collection efficiency and asset quality,” she said in a statement.

Advances for the lender increased by 44% yoy and 6% yoy to reach ₹52,452 crore as of September 30, of which 90% were retail sales and 93% secured. The bank said it securitized assets worth ₹715 crore during the quarter to optimize borrowing costs.

Deposits also rose 49% yoy on a low basis and 7% sequentially to ₹58,335 crore, of which low-cost CASA deposits accounted for 42%.

Other statistics

The bank raised ₹2,500 crore in capital during the quarter, bringing the capital adequacy ratio to 23.4%, of which Tier I capital was 21.3%.

The gross NPA ratio improved slightly to 1.90% from 1.96% in the previous quarter and significantly from 3.16% in the corresponding quarter of last year.

AU Small Finance Bank said the priority was to optimize the cost of funds, consolidate the franchise of deposits, preserve risk-adjusted returns and grow at a steady pace, adding that it would continue to add capacity around wealth, current account, SMF (small and marginal farmers) loans.

Michael J. Birnbaum