AU Small Finance Bank (AUBANK) Q2 25/26 earnings summary

Executive summary

• Achieved in-principle RBI approval to transition to a universal bank, with an 18-month transition period, marking a pivotal milestone and unlocking significant growth and operational benefits.

• Demonstrated resilience and steady progress, with robust growth in deposits and core asset businesses, and maintained strong asset quality despite macroeconomic volatility.

• Maintained a retail-focused, tech-led, and customer-centric business model with robust governance.

• Unaudited financial results for the quarter and half year ended September 30, 2025, were approved by the Board of Directors on October 17, 2025.

• Re-appointment of Mr. Sanjay Agarwal as Managing Director & CEO for three years from April 19, 2026, subject to shareholder and RBI approval.

Financial highlights

• Total deposits grew 21% YoY and 3.8% QoQ to ₹1,32,509 Cr; CASA ratio stable at 29.4%.

• Gross loan portfolio rose 17% YoY and 4.5% QoQ to ₹1,22,877 Cr; retail secured assets grew 19.8% YoY.

• Net interest income up 9% YoY to ₹2,144 Cr; NIM improved 5 bps QoQ to 5.5%.

• PAT for Q2 FY26 at ₹561 Cr, down 2% YoY; H1 FY26 PAT up 6% YoY to ₹1,142 Cr.

• Cost of funds declined 25 bps QoQ to 6.83%; credit cost for H1 FY26 at 0.64%.

Outlook and guidance

• Expect continued NIM expansion and margin improvement as deposit repricing continues and cost of funds falls.

• Full-year credit costs guided to remain within 1% of average total assets, with further normalization expected.

• Universal bank transition anticipated to enhance brand, deposit access, and product suite acceptance.

• Targeting loan growth at 2x-2.5x nominal GDP, with unsecured book stabilization and renewed growth in microfinance and credit cards.

• Cost-to-income ratio to remain below 60%, and OPEX to assets below 4.3%.