AU Small Finance Bank Reports 30% Increase in Q1 Net Profit

AU Small Finance Bank reported a 30% jump in net profit for Q1, reaching Rs 502 crore. The bank's total income also surged to Rs 4,315 crore. The board has approved making an application to transition to a Universal Bank. However, asset quality slightly deteriorated with rising NPAs.

AU Small Finance Bank on Thursday reported a significant 30 percent increase in its net profit to Rs 502 crore for the first quarter that ended on June 30, 2024. This compares to a net profit of Rs 387 crore in the same period last year.

The Jaipur-based lender saw its total income rise dramatically to Rs 4,315 crore from Rs 2,773 crore a year ago, according to a regulatory filing. The bank's interest income also grew to Rs 3,769 crore during the reviewed period, up from Rs 2,458 crore in the corresponding quarter the previous year.

In a notable development, the bank's board has approved an application to the Reserve Bank of India (RBI) for transitioning from a Small Finance Bank to a Universal Bank. This follows the RBI's guidelines for 'on tap' licensing of universal banks dated August 1, 2016, and a circular on voluntary transition dated April 26, 2024.

However, the bank witnessed a slight decline in asset quality, with gross non-performing assets (NPAs) rising to 1.78 percent of gross advances as of June 30, 2024, up from 1.76 percent in the same quarter last year. Net NPAs also decreased to 0.63 percent from 0.55 percent at the end of Q1 last year. Consequently, provisions (excluding tax) and contingencies surged to Rs 319 crore, compared to Rs 33 crore earmarked in the previous year.

The capital adequacy ratio (CRAR) dipped to 20.11 percent from 21.46 percent on June 30, 2023, reflecting the financial challenges ahead.