AU Small Finance Bank Reports 53 Percent Jump in Second Quarter Net Profit

AU Small Finance Bank posted a 53 percent jump in net profit at 858 crore rupees for the second quarter that ended on September 30, 2026. The lender earned 561 crore rupees in the same period last year, with the growth driven by higher interest income. Total income rose to 6,382 crore rupees in the quarter under review from 5,224 crore rupees a year ago. Interest income increased to 5,612 crore rupees compared with 4,511 crore rupees previously. Net interest income improved by 32 percent to 2,820 crore rupees from 2,144 crore rupees in the September quarter of 2025, while the net interest margin increased to 5.8 percent from 5.5 percent.

Asset Quality

The bank's asset quality also showed improvement as gross non-performing assets dropped to 1.99 percent of gross advances at the end of the September quarter, down from 2.41 percent a year ago. According to the Economic Times, this gross NPA ratio fell by 42 basis points and helped lower provisions by 25 percent to 359 crore rupees. Net bad loans moderated to 0.81 percent from 0.88 percent, and the annualised credit cost improved to 0.8 percent from 1.2 percent. However, the capital adequacy ratio decreased to 18.54 percent from 18.78 percent at the end of September 2025.

Management Comments

MD and CEO Sanjay Agarwal said the quarterly performance reflects an institution that combines growth with profitability and ambition with prudence. He added that the balanced growth of the franchise and stable asset quality reinforce confidence in long-term performance.

Context

Small finance banks in India focus mainly on basic banking services for small businesses, micro and small industries, and unorganized sectors. Strong quarterly profits and falling bad loans generally show healthy credit demand and better recovery rates across retail and commercial segments.