AU Small Finance Bank Q4 Profit Dips Sequentially On Higher Microfinance Provisions

AU Small Finance Bank reported a 4.7% sequential fall in net profit for the March quarter to ₹5.04 billion, weighed down by higher provisions for its microfinance portfolio. The bank created a contingency provision of ₹170 million during the quarter, marking its first sequential profit decline.

Total provisions rose 26.6% on quarter to ₹6.35 billion, including an accelerated ₹1.5 billion provision aimed at boosting coverage. Provision coverage improved to 84%, including technical write-offs.

While the quarter saw stress in microfinance, overall asset quality improved marginally. Gross Non Performing Assets eased to 2.28% from 2.31%, and net NPAs to 0.74% from 0.91%. Gross slippages fell to ₹8.9 billion from ₹9.6 billion in the previous quarter.

Net interest income grew 4% in the quarter to ₹20.94 billion, and other income jumped 23% to ₹6.18 billion, driven by treasury gains. Total income rose to ₹50.3 billion from ₹47.3 billion, though net interest margin narrowed 6 bps to 5.80%.

Gross loan book stood at ₹1.16 trillion, up 6.2% sequentially, while deposits rose 10.7% to ₹1.24 trillion. The CASA ratio was at 29.2% as of March 31.

For 2024-2025, net profit was ₹21.06 billion versus ₹15.35 billion a year earlier (pre-merger), while total income surged to ₹185.90 billion from ₹122.52 billion. The bank merged with Fincare Small Finance Bank on April 1, 2024.