Aavas Financiers Posts Strong Q3 Growth, Margins Expand

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AuthorVihaan Mehta|Published at:
Aavas Financiers Posts Strong Q3 Growth, Margins Expand
Overview

Aavas Financiers Limited has announced strong unaudited financial results for Q3 FY26. The company reported a 16% year-on-year growth in Net Profit to Rs 1,700 million (Rs 1.70 bn), fueled by a 17% YoY increase in Net Interest Income (NII). Key profitability metrics improved, with Net Interest Margins (NIM) rising 27 basis points YoY to 8.01% and borrowing costs declining. Operational efficiency saw sequential gains, and asset quality remained strong with improving DPD and GNPA figures. The company also surpassed Rs 20,000 crore in balance sheet size and successfully raised Rs 975 crore via NCDs.

📉 Aavas Financiers Reports Robust Q3 FY26 Performance

Aavas Financiers Limited has showcased a strong operational and financial performance in its unaudited results for the quarter and nine months ended December 31, 2025 (Q3 FY26 and 9MFY26). The company demonstrated consistent growth and improved profitability, signaling a healthy trajectory.

The Numbers:

  • Nine Months Ended FY26 (9MFY26): Assets Under Management (AUM) grew by a significant 15% YoY to Rs 2,22,035 million (Rs 222.04 billion). Net Interest Income (NII) saw a 16% YoY increase, while Profit After Tax (PAT) rose 13% YoY to Rs 4,739 million (Rs 4.74 billion). Net Worth compounded steadily, growing 16% YoY to Rs 48,581 million (Rs 48.58 billion).
  • Third Quarter of FY26 (Q3 FY26): Net Profit (PAT) grew 16% YoY to Rs 1,700 million (Rs 1.70 billion). This was supported by a robust 17% YoY growth in NII. The company's spread expanded by 40 basis points (bps) YoY to 5.34%, driven by a 56 bps YoY improvement in borrowing costs to 7.68%. Net Interest Margin (NIM) as a percentage of total assets stood at 8.01% in Q3 FY26, up 27 bps YoY.
  • Profitability & Efficiency: Return on Assets (ROA) improved by 6 bps YoY to 3.43%, and Return on Equity (ROE) improved by 8 bps YoY to 14.29%. Operational efficiencies were notable, with the Opex-to-Assets ratio declining 7 bps sequentially to 3.44%, and the Cost-to-Income ratio falling substantially by 75 bps sequentially to 42.9%.

The Quality & Asset Management:

Asset quality was maintained at strong levels. The 1+ days past due (DPD) metric improved by 19 bps sequentially to 3.80% as of December 2025, while Gross Non-Performing Assets (GNPA) improved by 5 bps sequentially to 1.19%. Credit costs remained stable at 16 bps, with management reiterating guidance to keep credit costs below 25 bps on a sustainable basis.

Milestones & Outlook:

Key milestones include the balance sheet surpassing Rs 20,000 crore (Rs 200 billion). The company also completed its largest-ever Non-Convertible Debenture (NCD) issuance, raising approximately Rs 975 crore (USD 108 million) from a multilateral financial institution, bolstering its funding profile. Technological advancements have significantly reduced the turnaround time from login to sanction to 6 days from a previous peak of 13 days. Over 2,800 customers benefited from Government schemes like PMAY 2.0, receiving subsidies totaling more than Rs 90 million.

The Managing Director & Chief Executive Officer expressed a positive outlook for the housing finance sector, citing favorable macro and policy developments, conducive interest rates, and a continued focus on affordable housing. The company remains committed to its pillars of Governance, Asset Quality, Profitability, and Growth (GAPG), leveraging technology to drive sustainable expansion and maximize shareholder value.

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