AU Small Finance Bank reported a 37% year-on-year profit rise for the June quarter, supported by a 32% growth in net interest income. The bank saw healthy loan and deposit expansion alongside improved asset quality. Additionally, the company strengthened its leadership by elevating Yogesh Jain to the role of Deputy CEO.
Detailed Coverage
AU Small Finance Bank delivered a strong performance in the first quarter of the fiscal year 2027, with net profit rising to ₹796 crore. This 37% year-on-year growth was driven primarily by a robust 32% increase in net interest income, which stood at ₹2,695 crore. The bank's net interest margin, a key indicator of profitability for lenders, improved by 47 basis points to reach 5.9% during the quarter.
Strong Loan and Deposit Growth
The bank reported a 24% year-on-year increase in total deposits, reaching ₹1.58 lakh crore, while its gross loan portfolio expanded by 23% to ₹1.44 lakh crore. Growth was particularly visible in disbursements, which surged 42% compared to the same period last year. Secured lending, which includes both retail and commercial segments, grew by 25%, while unsecured loans grew by 11%. Despite the increase in business, the bank maintained a CASA ratio—the proportion of deposits in current and savings accounts—at 29%, showing stable low-cost funding.
Improving Asset Quality
Asset quality metrics showed significant improvement for the quarter. Gross non-performing assets, which track the proportion of bad loans, declined to 2.10% from 2.47% in the previous year. Net NPAs also improved, falling to 0.76% from 0.88%. The bank also noted a 22% reduction in new slippages, which fell to ₹798 crore. Credit costs, representing the money set aside for potential loan losses, improved to 0.8% annually, down from 1.4% a year earlier. The bank reported a provision coverage ratio of 85%, ensuring it holds enough capital to cover potential defaults.
Strategic Leadership Changes
To manage its growing scale and physical footprint, which now includes over 12.5 million customers, the bank announced a leadership change. Yogesh Jain, who has been serving as the Chief Operating Officer, has been appointed as the Deputy CEO, effective July 25, 2026. He will continue to report to the Managing Director and CEO, Sanjay Agarwal. This change aligns with the bank's expansion efforts, which included the addition of 16 new liability branches this quarter. Investors may track the bank's future progress by monitoring its ability to maintain net interest margins amid interest rate changes, the pace of branch expansion, and the long-term performance of its unsecured loan portfolio.