AU Small Finance Bank reported a 37% rise in Q1 net profit, driven by strong NII growth and higher margins.
The lender's asset quality improved, with GNPA falling to 2.10% and provisions declining 30% year-on-year.
The bank promoted Yogesh Jain as Deputy CEO and fixed July 31 as the record date for its final dividend.
AU Small Finance Bank on Saturday reported a 37% year-on-year (YoY) rise in net profit to ₹796 crore for the quarter ended June 30, 2026, supported by strong growth in net interest income (NII), expanding margins and improving asset quality.
The bank's net interest income (NII) increased 32% YoY to ₹2,695 crore, while the net interest margin (NIM) expanded 47 basis points to 5.9%. Total income rose 19% YoY to ₹3,385 crore, despite a 60-basis-point decline in the cost of funds to 6.48%.
4 July 2026
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The Board of Directors approved the unaudited financial results at its meeting held on July 25.
Deposits, Loan Book Maintain Strong Growth
Total deposits grew 24% YoY to ₹1,57,727 crore, while CASA deposits rose 22% to ₹45,399 crore, keeping the CASA ratio stable at 29%.
The bank's gross loan portfolio expanded 23% YoY to ₹1,44,250 crore, aided by a 42% increase in disbursements. Secured retail and commercial businesses grew 25%, while unsecured businesses recorded 11% growth. The credit-deposit ratio stood at 80%, excluding refinance-backed advances.
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Asset quality strengthened during the quarter as gross slippages declined 22% YoY to ₹798 crore. The gross non-performing asset (GNPA) ratio improved to 2.10% from 2.47% a year earlier, while the net NPA (NNPA) ratio declined to 0.76% from 0.88%.
Provisions fell 30% YoY to ₹371 crore, including a one-time provision of ₹23 crore to strengthen policies across the microfinance, personal loan, two-wheeler and EEFI portfolios.
The bank's capital adequacy ratio remained healthy at 18.9%, with Tier-I capital at 17.1%.
Deputy CEO Appointment, AI Push
The bank said it continues to progress towards becoming a universal bank after receiving the Reserve Bank of India's in-principle approval.
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During the quarter, it rolled out an AI-enabled gold loan origination platform and an agentic AI platform developed with Intellect Design Arena. More than 90% of transactions are now processed through the AU 0101 app, which recently introduced an enhanced real-time payments interface.
Separately, the board approved the elevation of Yogesh Jain from Chief Operating Officer to Deputy Chief Executive Officer, effective July 25, 2026, to strengthen the management team as the bank expands its operations.
The bank has also fixed July 31, 2026, as the record date for its final dividend.
Shares of AU Small Finance Bank settled 2.59% higher at ₹1,004 in the previous trading session. The stock has declined 2% over the past month but remains 1.4% higher so far this year.
