AU Small Finance Bank reported a strong financial performance for the first quarter ended June 2026 (Q1 FY27), posting a 37% year-on-year increase in net profit to ₹796 crore. The growth was driven by higher net interest income (NII) and lower provisions, although profit declined 4% on a sequential basis.
The bank’s NII rose 32% year-on-year to ₹2,695 crore, supported by healthy growth in advances. However, other income declined 15% to ₹689 crore during the quarter. Net interest margin (NIM), a key profitability indicator, improved by 59 basis points year-on-year to 5.9%, though it moderated by 7 basis points compared with the previous quarter due to the reversal of certain one-time gains recorded in the March quarter.
Asset quality showed mixed trends. Fresh slippages declined 22% year-on-year to ₹798 crore, reflecting improvement in the unsecured loan portfolio, while slippages in the secured portfolio remained stable. Provisions fell 30% to ₹371 crore as stress in unsecured loans eased. However, gross non-performing assets increased sequentially by 7 basis points to 2.10%, while net NPAs edged up by 2 basis points to 0.76%.
The bank’s gross loan portfolio expanded 23% year-on-year to ₹1.44 trillion. Secured businesses, including retail and commercial lending, grew 25%, while unsecured businesses such as microfinance, credit cards, and personal loans increased 11%. Overall loan disbursements surged 42% year-on-year, reflecting continued credit demand.