Synopsis: AU Small Finance Bank (SFB) reported a 41% year-on-year growth in net profit for Q3 FY25, reaching ₹528 crore compared to ₹375 crore in the same period last year. Interest income surged by 50% to ₹4,113 crore. Gross NPAs increased to 2.31% from 1.98% a year ago, while Net NPAs rose to 0.91%. Shares climbed 4.5% on the announcement, touching ₹609 on the NSE.
AU Small Finance Bank announced its financial results for Q3 FY25, showcasing a robust 41% year-on-year (YoY) increase in net profit to ₹528 crore, compared to ₹375 crore in the same quarter of the previous fiscal year.
Despite this impressive YoY growth, the Profit After Tax (PAT) declined 7.5% sequentially from ₹571 crore in Q2 FY25.
Revenue Growth:
The bank's interest income for the quarter surged by 50% to ₹4,113 crore, compared to ₹2,736 crore in Q3 FY24.
Meanwhile, interest expenses rose by 48%, amounting to ₹2,090.76 crore, up from ₹1,410.94 crore in the corresponding period last year.
Asset Quality:
Despite a strong financial performance, the bank's asset quality showed some signs of stress:
- Gross Non-Performing Assets (NPAs): Increased to 2.31% (₹2,335.51 crore) in Q3 FY25, up from 1.98% (₹1,339.68 crore) in Q3 FY24 and the previous quarter.
- Net NPAs: Also rose to 0.91% (₹905.59 crore) compared to 0.68% (₹456.15 crore) a year ago.
Market Reaction:
Following the announcement, AU SFB shares experienced a surge of 4.5%, reaching a day’s high of ₹609 on the NSE.
Challenges and Future Outlook:
The rising Gross and Net NPAs indicate increasing stress in the bank's asset quality, which could pose challenges in the near term.
However, the strong growth in interest income reflects the lender's expanding loan book and operational efficiency.
Conclusion:
AU Small Finance Bank has delivered robust growth in its Q3 FY25 financial performance, with a significant YoY rise in net profit and interest income.
However, the rising NPA levels signal the need for caution in asset quality management.
Investors and stakeholders will be keenly watching the bank's future strategies to address these challenges while maintaining its growth trajectory.
Disclaimer: This article is for informational purposes only and should not be considered as investment advice. Readers are advised to consult a qualified financial advisor before making any investment decisions.
