AU Small Finance Bank reported a 37% year-on-year increase in net profit after tax (PAT) to ₹796 crore for the quarter ended June 30, 2026, driven by robust growth in net interest income (NII) and improved asset quality metrics. The bank’s NII surged 32% YoY to ₹2,695 crore, while the net interest margin (NIM) expanded by 47 basis points to 5.9%, reflecting effective yield management despite a 60 bps decline in cost of funds to 6.48%. This performance underscores the bank’s ability to sustain profitability amidst geopolitical uncertainties and tighter liquidity conditions, with total income rising 19% YoY to ₹3,385 crore.

The Board of Directors approved the unaudited financial results on July 25, 2026, under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Joint statutory auditors M S K A & Associates LLP and Mukund M. Chitale & Co. issued an unmodified limited review report. The bank also announced leadership changes, elevating Yogesh Jain from Chief Operating Officer to Deputy CEO effective July 25, 2026, to strengthen management bandwidth as operations scale.

Key Financial Metrics

Balance Sheet Growth

Deposits grew 24% YoY to ₹1,57,727 crore, with CASA deposits increasing 22% YoY to ₹45,399 crore, maintaining a stable CASA ratio of 29%. The gross loan portfolio expanded 23% YoY to ₹1,44,250 crore, supported by a 42% YoY rise in disbursements. Secured businesses (Retail + Commercial) led this growth with a 25% YoY increase, while unsecured businesses grew 11% YoY. The credit deposit ratio stood at 80%, excluding advances created from refinance by Development Finance Institutions.

Asset Quality and Capital

Asset quality showed signs of stabilization as slippages declined 22% YoY to ₹798 crore. The gross NPA ratio improved to 2.10% from 2.47% in Q1FY26, and the net NPA ratio decreased to 0.76% from 0.88%. Provisions fell 30% YoY to ₹371 crore, including a one-time provision of ₹23 crore for strengthening policies in MFI, personal loans, two-wheeler, and EEFI segments. The capital adequacy ratio remained robust at 18.9%, with Tier I capital at 17.1%.

Strategic Initiatives and Technology

The bank continues its transition toward a universal banking model, having received in-principle approval from the Reserve Bank of India. Technological advancements include the rollout of an AI-enabled gold loan origination platform and an agentic AI platform built with Intellect Design Arena. More than 90% of transactions are now processed through the AU 0101 app, which recently launched an enhanced real-time payments interface. Additionally, AU Small Finance Bank strengthened its partnership with Motilal Oswal Financial Services by introducing a fund-blocking feature for their 3-in-1 Account proposition.

What the Numbers Show

The divergence between the 32% surge in NII and the 26% rise in operating expenses highlights improving operating leverage, contributing to a 41% YoY jump in core pre-provisioning operating profit (excluding treasury income). While total other income declined 15% YoY due to treasury headwinds, core other income grew 33% YoY, indicating stronger fee-based revenue streams. The simultaneous improvement in NIM and decline in cost of funds suggests successful liability management, allowing the bank to pass on lower funding costs partially to borrowers while retaining margin expansion.

AU Small Finance Bank witnessed a notable block trade on the BSE, with approximately 279679 shares changing hands in a single transaction. The deal was executed at a price of ₹992.05 per share, aggregating to a total transaction value of ₹27.75 crore.

Block Trade Details

The following table summarises the key parameters of the block trade recorded on the BSE:

Block trades of this scale typically indicate significant participation by institutional investors or large stakeholders, and are executed outside the regular market mechanism to minimise price impact. The transaction in AU Small Finance Bank underscores active interest in the stock at the prevailing price level.