AU Small Finance Bank (AU SFB) has reported a robust Q2 FY26, highlighted by strong deposit and loan growth, and its transition to a universal bank. Deposit growth reached approximately 21% YoY, and the bank received in-principle approval from RBI for universal banking. Asset quality remained strong, and profitability was aided by improving margins and declining credit costs. The bank is optimistic about future earnings driven by margin expansion and reduced credit costs.
Key Financial Highlights
AU Small Finance Bank showcased a resilient performance in Q2 FY26 amid mixed economic conditions:
- Deposit Growth: Achieved approximately 21% YoY growth in deposits, reaching ₹1.33 Lakh Crore.
- Loan Growth: Experienced 22% YoY growth in loans (excluding unsecured loans). Total portfolio grew by 17% YoY to ₹1.23 Lakh Crore.
- Asset Quality: Demonstrated improvement in asset quality with unsecured credit quality on the cusp of recovery.
- Profitability: RoA/RoE for Q2 FY26 stood at 1.4%/12.4% respectively, driven by improved margins and reduced deposit costs.
Transition to Universal Bank
AU SFB became the first Small Finance Bank to receive in-principle approval from RBI for transitioning into a universal bank on August 7, 2025. This transition is expected to offer several key benefits:
- Enhanced Brand: Increased trust and acceptance across public, customers, and stakeholders.
- Ease of Business: Improved platform with greater visibility and acceptability.
- Access to Deposits: Enhanced access to deposit sources driven by higher trust and lower cost of funds.
- Market Acceptance: Greater market acceptance of full product suite.
Balance Sheet and Key Ratios
Here are some key figures as of September 30, 2025:
- Total Deposits: ₹1,32,509 Cr
- Gross Loan Portfolio: ₹1,22,877 Cr
- Total Assets: ₹1,65,542 Cr
- Gross NPA: 2.41%
- Net NPA: 0.88%
- Provisioning Coverage Ratio (PCR): 84%
- Capital Adequacy Ratio (CRAR): 18.8%
Growth and Expansion
The bank has a well-defined growth strategy in place:
- Distribution Network: Expanding its presence across India.
- Digital Engagement: Deepening customer engagement through digital platforms like AU0101.
- Cross-Sell Products: Enhanced focus on cross-selling various financial products, including wealth management and insurance.
Source: BSE
