AU Small Finance Bank posts highest-ever quarterly profit at ₹393 cr in Q3, growth across parameters

AU Small Finance Bank posted the highest-ever quarterly profit from operating activities in the third quarter of FY23 with PAT rising by 30.1% to ₹392.82 crore compared to ₹302. 04 crore in the same quarter a year ago. Q3 PAT rises by 14.66% from ₹342.6 crore in September 2022 quarter. AU Small continued to deliver strong and consistent performance across parameters in Q3 despite the challenging macro environment. Also, the lender's asset quality improved further.

AU Small said, "Q3’FY23 was another quarter of strong and consistent performance across parameters delivering healthy & calibrated loans and deposits growth, stable margins and asset quality, and sustained traction across credit cards and other digital initiatives amidst a challenging macro environment."

During the quarter, net interest income stood at ₹1,153 crore up 6% QoQ and 41% YoY. Net interest margin was also stable at 6.2% in Q3FY23.

Sanjay Agarwal, MD & CEO, AU Small Finance Bank said, “Q3’FY23 was another quarter of strong and consistent performance across all key parameters supported by sustained underlying business momentum and strong capital base. Despite the challenging environment around inflation and liquidity, we were able to maintain margins, deliver growth in loan market share, improve asset quality, and focus on productivity while achieving our highest-ever quarterly profits."

Further, in Q3, AU Small highlighted that its asset quality improved sequentially with gross NPA coming at 1.81% in Q3FY23 versus 1.90% in Q2FY23. The gross NPA dropped sharply from 2.60% levels in Q3 of FY22. The asset quality was driven by sustained business momentum. Net NPA was stable at 0.51%, while restructured advances dipped to 1.4%.

Apart from provisions of ₹693 crore against the gross NPA pool, AU Small has also additionally maintained provisions against the restructured book at ₹127 crore, contingency provision of ₹98 crore, floating provision of ₹41 crore, and standard provision of ₹176 crore.

The provision coverage ratio was 72% against 71% in Q2FY23. Including technical write-offs, the PCR stood at 75%.

Furthermore, deposits continued to gain traction, up by 5% QoQ and higher by 16% since March 2022 to ₹61,101 crore. CASA deposit grows by 35% YoY to reach ₹ 23,471 crore. CASA ratio stood at 38% and CASA + Retail TD mix at 70%.

Meanwhile, gross advances surged by 7% sequentially to ₹56,335 crore. The advances are up by 20% since March 2022. The SFB has a securitised asset portfolio worth ₹ 1,164 crore during Q3’FY23.

Also, the bank has added HDFC Life and ICICI Lombard as Bancassurance partners with a view to expanding the Bank’s third-party product offering to its customers.

The bank's balance sheet crossed ₹80,000 crore and its net worth reached ₹10,540 crore -- up 5x in 5 years.

Q3FY23 also witnessed collection efficiencies sustaining at 107%, resulting in further improvement in asset quality. During the quarter, the bank opened 42 new touchpoints (net addition 35) and its physical network is now spread across 1,015 touchpoints across 21 states and 3 UTs. The Bank also established its presence in 2 newer states this quarter namely Andhra Pradesh and Kerala.

Overall, Agarwal concluded, "our Bank is well positioned to capitalize on the emerging opportunities, and the recent acknowledgment as ‘Best Small Finance Bank’ by BT-KPMG will inspire us further."

On BSE, AU Small stock finished at ₹621.45 apiece down by 1.29%. Its market cap is over ₹41,420 crore.