AU Small Finance Q3 PAT declines 37% YoY to Rs 302 cr

The small finance bank reported a 37% decline in standalone net profit to Rs 302.05 crore on a 9% fall in total income to Rs 1,772.09 crore in Q3 FY22 over Q3 FY21.

The bank's other income fell nearly 60% to Rs 275.64 crore in Q3 FY22 from Rs 685.61 crore posted in Q3 FY21. The bank recorded gain of Rs 480 crore from stake sale in Aavas Financiers in Q3 FY21 which lead to a high base in previous year of the same quarter.

Net interest income grew by 30% year on year to Rs 820 crore in Q3 FY22 from Rs 633 crore in Q3 FY21. Meanwhile, net interest margin improved to 6.3% in Q3 FY22 from 5.9% in Q3 FY21.

Meanwhile, the bank's operating profit before provisions and contingencies declined 48.8% to Rs 458.43 crore in Q3 FY22 as compared to same period last year. Standalone profit before tax fell 31.7% to Rs 402.46 in the period under review.

Provisions and contingencies dipped by 81.7% year on year to Rs 55.97 crore in Q3 FY22 over Q3 FY21. The bank said it has additionally maintained contingency provision buffer of Rs 300 crore (75 basis points of advances) over and above provisions for GNPA, restructured book and standard provisions.

On the asset quality front, the bank's asset quality improved significantly with GNPA at 2.6% in Q3 FY22 as against 3.2% in the previous quarter. Net NPA stood at 1.3% of net advances in Q3 FY22 against 1.7% in the previous quarter. The bank's collection efficiency averaged 106% as compared to 97% last year for the same period.

AU Small Finance said that it saw improvement in the overall business environment resulting in strong disbursements. In Q3FY22, fund-based disbursements were up 33% year on year to Rs 8,152 crore as compared to Rs 6,115 crore in the same quarter of the previous year. The bank's average cost of funds also reduced to 5.9% in Q3 FY22 from 6.7% in the same quarter last year.

Deposits grew 49% YoY to RS 44,278 crore from Rs 29,708 crore, with further improvement in CASA ratio to 39% compared to 22% in a year ago period. The bank witnessed a growth of 33% year on year in its gross advances to Rs 40,719 crore from Rs 30,523 Crore. The small finance bank remains well capitalized with a strong tier-I capital ratio of 18.2% and total CRAR of 19.5% which is sufficiently above minimum requirement of 7.5% and 15% respectively.

Commenting on the performance, Sanjay Agarwal, MD & CEO of AU Small Finance Bank said, "In Q3'FY22, we saw continued improvement in the operating environment and borrower cashflows. These factors along with the secured nature of our loan book led to significant asset quality improvement in the quarter, along with continued improvement across all other key focus areas. These include improving granularity of our deposit base, healthy asset growth driven by small-ticket secured loans, increasing adoption of our digital properties following the launch of our app, QR codes and credit card offerings. Our confidence in our borrower base, power of the banking platform, and our own business model of small-ticket secure lending has been reinforced. Given our strong lending model, increasing granularity of deposits, growing reach and our evolving digital properties, I feel we are well positioned to take advantage of the significant opportunities in the segments we are present in. Nonetheless, we remain cautiously optimistic in our approach as the situation around the pandemic remains fluid.

AU Small Finance Bank (formerly Au Financiers (India)) was incorporated in 1996 as an NBFC. AU started its banking operations in April 2017. The SFB's main focus is retail asset-financing segment, primarily in the vehicle financing segment alongside small business loans to MSMEs.

Shares of AU Small Finance Bank closed 0.37% lower at Rs 1,270.70 on Friday.

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