AU Small Finance hits 5% lower circuit for 2nd straight day post Q4 results

The bank reported subdued earnings dented by higher provisions toward special mention accounts (SMA) accounts

Shares of AU Small Finance Bank were locked in the 5 per cent lower circuit band for the second straight day, at Rs 491, on the BSE on Tuesday after the lender reported subdued earnings owing to the higher provisions created toward special mention accounts (SMA) accounts.

Till 09:51 am, around 60,000 shares have changed hands on the counter on the NSE and BSE, and there were pending sell orders for 750,000 shares. In comparison, the S&P BSE Sensex was up 1 per cent at 32,054 levels.

The stock of the private sector lender has skid 10 per cent in the past two trading days. The scrip more-than-halved from its 52-week high level of Rs 1,218, touched on March 2 this year, to reach its 52-week low level of Rs 444 on April 7, 2020.

During the March quarter, AU Small Finance Bank reported 3.5 per cent year on year (YoY) growth in profit after tax to Rs 122 crore, affected by higher provisions of Rs 151 crore, as it made 5 per cent provisions (Rs 138 crore) toward SMA accounts, as per an RBI circular. Net interest income or NII grew 43 per cent YoY to Rs 555 crore, while margins were stable at 5.5 per cent.

“AU Small Bank has reported a steady operating performance, but Covid-19 provisions have dented earnings. The bank has reported robust asset quality ratios. However, collection efficiency has declined due to the lockdown,” Motilal Oswal Securities said in a results update.

The bank disclosed that moratorium has been availed for 25 per cent of the loan book, and the SMA book stands at Rs 2,300 crore (8.5 per cent of the loan book) as of April’20, which would keep asset quality under watch, the brokerage added.