AU Small Finance Bank net jumps 30% to Rs 393 cr on healthy core income

AU Small Finance Bank on Thursday reported its highest quarterly net profit of Rs 393 crore, a growth of 30 per cent annually, for the October-December period of 2022-23 on improved asset quality and the resultant decline in provisions.

The bank said its gross bad loans declined to 1.81 per cent or Rs 1,019 crore in the reporting quarter from 2.60 per cent or Rs 1,058 crore in December 2021 and net bad loans improved to 0.51 per cent from 1.29 per cent or Rs 285 crore and Rs 520 crore, respectively.

Of the total provision, Rs 127 crore are for the restructured book and Rs 98 crore are for contingency provisions and Rs 41 crore are floating provision. Standard provisions stood at Rs 176 crore or 30 bps of total advances.

Total income of the Jaipur-based company rose 36 per cent to Rs 2,413 crore, driven by a full 41 per cent jump in net interest income at Rs 1,153 crore. The key profitability metric net interest margin which is the difference between the cost of deposit and loan pricing, at 6.2 per cent.

Advances growth was tepid for the bank, despite the industry as a whole were disbursing record quantum of loans. Its loan sales grew at a tepid 7 per cent to Rs 56,335 crore and so did deposits which inched up 5 per cent to Rs 61,101 crore of which the low-cost Casa deposits were Rs 23,471 crore, adding 35 per cent more than in December 2021.

This had the Casa ratio at 38. This had the balance-sheet of the bank crossing the 80,000-crore-mark.

Of the total loans, 90 per cent are retail and 93 per cent of the loan book is secured. The bank said its average cost of funds for the quarter stood at 6 per cent.

Sanjay Agarwal, the managing director & chief executive of the bank attributed the improvement in the asset quality to the sustaining business momentum and also a decline in standard restructured advances to 1.4 per cent.