AU Small Finance Bank (AUBANK) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 saw strong growth in deposits, profitability, and income despite a challenging environment marked by high inflation, elections, and weather disruptions impacting informal and rural segments.

• Early signs of economic recovery and improved rural demand were observed since mid-September.

• Application filed with RBI for transition to Universal Bank, aiming for sustainable growth and lower funding costs.

• Results include Fincare Small Finance Bank post-amalgamation from April 1, 2024, making current period figures not directly comparable.

• Focus on optimizing cost of funds, improving yields, and controlling operating expenses.

Financial highlights

• Total deposits crossed ₹1.1 lakh crore, up 12.7% quarter-on-quarter, with CASA ratio at 32%.

• Gross loan portfolio reached ₹1,05,031 crore, up 5.3% quarter-on-quarter and 8.9% YTD.

• Net Interest Income grew 58% YoY to ₹1,974 crore; PAT rose 42% YoY and 14% QoQ to ₹571 crore.

• Gross NPA at 1.98% and Net NPA at 0.75% as of September 30, 2024.

• Capital adequacy ratio at 18.51%–19.8% as of September 30, 2024.

Outlook and guidance

• Loan and deposit growth target of 25% for FY25 remains on track.

• NIMs expected to be protected near 6%, with cost of funds guidance at 7.10–7.15%.

• Credit costs expected to remain elevated at H1 levels (~1.28% of GLP), with a 5–10 bps variance possible.

• Amalgamation with Fincare expected to enhance scale and operational synergies.

• Aim to deliver full year RoA around 1.6%.