AU Small Finance Bank Q1 net up 32% YoY to Rs 268 cr, down 23% sequentially

Improvement in NII, even as trading losses weigh on profitability

AU Small Finance Bank’s net profit rose 32 per cent year on year (YoY) to Rs 268 crore in the quarter ended June (Q1FY23), on the back of improvement in its net interest income.

The Jaipur-based lender had posted a net profit of Rs 203 crore during the same period last year (Q1FY22). Sequentially, its net profit fell by 23 per cent from Rs 346 crore in Q4FY22.

The bank’s stock closed 1.92 per cent higher at Rs 576.75 per share on BSE on Wednesday.

The lender's net interest income (NII) was up 35 per cent in Q1FY23 to Rs 976 crore from Rs 924 crore in Q1FY22. Sequentially, the NII grew by four per cent from Rs 937 crore. However, its net interest margin (NIM) declined to 5.9 per cent in Q1FY23 from 6.0 per cent a year ago and 6.3 per cent in Q4FY22, according to an analysts' presentation.

Its yield on assets moderated to 13.3 per cent in Q1FY23 from 14 per cent a year ago and cost of funds declined to 5.7 per cent from 6.3 per cent in Q1FY22. With growing lower money (Current Account and Savings Account) and retail deposits, the effort would be to keep the FY23 cost of funds broadly in line with that of FY22.

Its trading portfolio came under pressure due to hardening yields and it booked trading losses of Rs 55 crore. Other income fell 26 per cent YoY to Rs 159 crore from Rs 215 crore in Q1FY22 and was down 49 per cent over Rs 311 crore in Q4FY22.

The bank’s asset quality profile improved with gross non-performing assets (GNPAs) declining to 1.96 per cent in June 2022 from 4.31 per cent till the year-ago quarter. Net NPAs dipped to 0.56 per cent during the quarter from 2.26 per cent a year ago.

The provision coverage ratio rose to 72 per cent for the quarter under review from 49 per cent a year ago.

The bank’s assets under management grew 37 per cent YoY to Rs 50,161 crore at the end of June 2022.

Its deposits grew by 48 per cent YoY to Rs 54,631 crore in June 2022.

The bank’s capital adequacy ratio (CAR) stood at 19.4 per cent in June 2022, down from 23.1 per cent in June 2021.