AU Small Finance Bank

AU Small Finance Bank reported its performance for the quarter ended September 30, 2025. Total deposits increased by 20.8% year-on-year to ₹1,32,510 crores, while gross advances grew by 22.4% to ₹1,17,520 crores. The bank's CASA ratio stood at 29.4%, compared to 32.4% in the same period last year. The gross loan portfolio expanded by 17.0% year-on-year to ₹1,22,870 crores. CASA deposits grew by 9.7% to ₹38,960 crores. On a quarterly basis, total deposits increased by 3.8% and gross advances rose by 5.3%. The information is provisional and subject to review by the Audit Committee, Board of Directors, and Statutory Auditors.

Three small finance banks - ESAF, Suryoday, and Utkarsh - are experiencing significant stress in their microfinance operations, with approximately 20% of their microloan portfolios at risk. Data from Sa-Dhan shows portfolios at risk for more than 30 days at 19.73% for ESAF, 22.76% for Suryoday, and 23.23% for Utkarsh as of June-end. All three banks maintain a high 45-55% share of unsecured microloans, contributing to deteriorating asset quality. ESAF sold ₹362 crore worth of loans to asset reconstruction companies and wrote off ₹371 crore in the June quarter. Both ESAF and Utkarsh reported losses during this period. Rating agencies have downgraded these banks, with CareEdge lowering ESAF's Tier 2 bonds to 'A-/negative' and Icra downgrading Utkarsh's subordinated debt by two notches to 'A/negative'. Utkarsh's gross NPA ratio increased to 11.4% from 9.4% in the previous quarter, while ESAF's gross NPA stood at 7.48% and Suryoday's at 8.5%. The continued asset quality deterioration and high credit costs are expected to impact profitability for the September quarter and full fiscal year.

AU Small Finance Bank has entered into a strategic partnership with Zaggle Prepaid Ocean Services Limited to launch co-branded retail credit and prepaid cards. The partnership introduces retail credit cards with Third-Party Application Provider integration and personalized recommendation engine, focusing on smart spending, easy rewards, and tech-enabled convenience. The collaboration will also develop a commercial credit card portfolio, combining AU SFB's underwriting expertise with Zaggle's enterprise network. Additionally, the partnership includes co-branded prepaid cards for corporate clients integrated with Zaggle's Zatix platform for real-time expense management, offering tax-saving benefits across fuel, meals, and gifts through the Zaggle mobile app. Zaggle will also introduce AU SFB to its southern regional corporate network as primary banking franchise. AU SFB operates over 2,505 banking touchpoints across 21 states and 4 union territories, serving 1.16 crore customers. Zaggle has issued over 50 million prepaid cards and serves more than 3,500 corporate enterprise clients with a user base exceeding 3.3 million.