AU Small Finance Bank rallies 8% on post Q3 business update

The private sector lender reported a sequential growth of 10.6 per cent and 26.5 per cent YoY in total assets under management to Rs 42,027 crore in December quarter

Shares of AU Small Finance Bank jumped 8 per cent to Rs 1,179.50 on the BSE in Wednesday’s intra-day trade after the private sector lender reported a sequential growth of 10.6 per cent and 26.5 per cent year-on-year in total assets under management (AUM) to Rs 42,027 crore in October-December quarter (Q3FY22).

In the past one week, the stock has outperformed the market by gaining 16 per cent, when compared with a 3.6 per cent rise in the S&P BSE Sensex. However, in past three months, the stock price of the bank has dipped 3.3 per cent, as against a 0.24 per cent gain in the benchmark index. The stock hit a record high of Rs 1,389 on August 24, 2021.

"Q3FY22 was near-normal quarter for the Bank with strong growth seen in advances, disbursements and deposits across all businesses and customer segments supported by a good festive season. The customer cashflows continue to improve supporting recovery trends and asset quality in the quarter.", AU Small Finance said in its provisional business update.

On a gross advances basis, the bank witnessed a growth of 11.9 per cent QoQ (+33.4 per cent YoY). The bank saw a significant improvement in the overall business environment, which resulted in strong disbursements. In Q3FY22, disbursements were up 59 per cent QoQ (+33 per cent YoY) at Rs 8,152 crore. Disbursements included ECLGS of Rs 48 crore in Q3FY22. The bank is witnessing strong traction in the Credit Cards business.

AU Small Finance Bank also posted a robust growth in advances, led by strong disbursements, due to an overall improvement in the business environment. Deposit growth too remains strong, led by robust CASA growth, resulting in a further improvement in CASA ratio. On the asset quality front, collection efficiency remains strong (in excess of 100 per cent), which is likely to result in an improvement in asset quality ratios, providing further comfort, Motilal Financial Services said in update.