AU Small Finance Bank Q3 results: Net profit down 4% at Rs 375 crore

Margins under pressure; provisions rise sharply

AU Small Finance Bank’s net profit declined by four per cent year on year (Y-o-Y) basis at Rs 375 crore for the October-December quarter of the financial year (FY) 2023-24 on a sharp rise in provisions and contingencies. The Jaipur-based lender had posted a net profit of Rs 393 crore in Q3FY23.

Sequentially, net profit was down by seven per cent over Rs 402 crore in the second quarter ended September 2023 (Q2FY24).  Its stock closed 3.91 per cent lower at Rs 708.05 per share on BSE.  The bank’s net interest income (NII) expanded by 15 per cent Y-o-Y to Rs 1,325 crore in Q3FY24. Sequentially, NII rose by six per cent from Rs 1,249 crore. However, its net interest margins (NIMs) declined to 5.5 per cent in Q3FY24 from 6.2 per cent in Q3FY23. Sequentially NIMs were at the same level as in Q2FY23, according to analyst presentation.

The bank said in a statement that the operating environment during Q3FY24 continued to witness higher interest rates with tight liquidity and persistent competition for deposits. NIM is expected to be at the lower end of the guided range of 5.5-5.7 per cent, it added.

The other income including that from treasury rose 52 per cent Y-o-Y to Rs 450 crore in Q3FY24 from Rs 295 crore in Q3FY23. Sequentially, it grew by six per cent over Rs 425 crore in Q2FY24. Its total deposits grew 31 per cent Y-o-Y to Rs 80,120 crore in Q3FY24 from Rs 61,101 crore in Q3FY23. Sequentially, they were up six per cent over Q2FY24.

Bank’s gross advances grew by 20 per cent Y-o-Y to Rs 67,624 crore in Q3FY24 compared to Rs 56,335 crore in Q3FY23. The slippage stood at Rs 403 crore in Q3FY24 as compared to Rs 231 crore a year ago and sequentially, they were up from Rs 349 crore in Q2FY24. As credit card book scales, the slippages are coming in line with industry trends, the bank said.

The provisions, including for bad loans and write-offs, grew by a whopping 389 per cent Y-o-Y to Rs 160 crore in Q3FY24 from Rs 33 crore a year ago. Sequentially, it grew by 40 per cent from Rs 114 crore in Q2FY24. It wrote off loans amounting Rs 119 crore in Q3FY24.

The bank’s Gross Non-performing Assets (NPAs) rose to 1.98 per cent in Q3FY24 from 1.81 per cent in Q3FY24 and 1.91 in Q2FY24. Net NPA was also up at 0.68 per cent from 0.5 per cent a year ago and 0.6 per cent in Q2FY24. Its Provision Coverage Ratio (PCR) including technical write-off and floating provisions stood at 72 per cent at the end of December 2023 as against 74 per cent in December 2022. Its capital adequacy ratio stood at 20.82 per cent at the end of December 2023.