AU Small Finance Bank’s Net Interest Income Rises 31.5% to 2,820 Crore Rupees
Key Facts
AU Small Finance Bank announced its second-quarter and first-half fiscal 2027 results on October 24, reporting quarterly net interest income of 2,820 crore rupees, up 31.5% from 2,144 crore in the year-earlier period, according to NDTV Profit. The figures show core income from lending expanded during the quarter, alongside growth in the loan and deposit books. In subsequent analyst coverage, Jefferies maintained its “Buy” rating but cut its price target to 1,250 rupees from 1,270, while JPMorgan maintained its “Overweight” rating and lowered its target to 1,165 rupees from 1,230. The changes reflect caution in valuing the stock despite business growth, NDTV Profit reported on October 26. Coverage available that day did not document a 10% drop in the stock after the results announcement.
On the balance sheet, gross deposits rose 28.6% year over year to 1.70 trillion rupees on September 30, 2026, while the gross loan book increased 25.1% to 1.54 trillion rupees, according to NDTV Profit. The pace shows deposit growth outstripped lending growth during the period, with both rising from their levels a year earlier. Current and savings account deposits also increased 29.1% to 50,289 crore rupees, accounting for 29.5% of total deposits. This detail offers a picture of the funding base’s composition alongside its size, with the figures indicating growth in current and savings account deposits alongside the increase in total deposits. These are year-over-year growth indicators through the end of September, not a comparison between consecutive quarters.
Asset quality improved year over year, with the gross non-performing loan ratio falling to 1.99% from 2.41% a year earlier, according to coverage of the bank’s results. The quarterly comparison presents a partly different picture: the ratio was 2.10% in the quarter ended in June, meaning it rose to 1.99% at the end of September. Net non-performing loans also declined to 0.81% in the second quarter from 0.88% in the year-earlier period, according to Moneycontrol. Meanwhile, the capital adequacy ratio fell to 18.54% at the end of September 2026 from 18.78% at the end of September 2025. These measures place the annual improvement in non-performing loans alongside the change in capital, without removing the importance of tracking asset quality from one quarter to the next.
Net provisions stood at 359 crore rupees in the second quarter, down 25% from 481 crore in the same period a year earlier, according to NDTV Profit. The decline in provisions came alongside a year-over-year fall in the non-performing loan ratio, providing additional context for the quarterly results. For the first half of fiscal 2027, net profit rose 45% to 1,654 crore rupees, and net interest income increased 32% to 5,516 crore. These figures reflect the six months combined and are separate from the quarterly comparison, in which net interest income grew 31.5%. In the first quarter of the same fiscal year, net profit was 796 crore rupees after annual growth of 37%, while the net interest margin was 5.9%, according to bank data.
Chief Executive Sanjay Agarwal said the quarter’s performance reflected the institution the bank was building, adding that it “combines growth with profitability, ambition with caution,” according to Moneycontrol. In its assessment of brokerages, NDTV Profit linked the price target cuts to caution over margins, asset quality and potential pressures related to the monsoon rains. The same coverage noted continued momentum in growth and deposits, but that did not stop Jefferies and JPMorgan from reducing their price estimates. Both firms maintained their “Buy” and “Overweight” ratings, respectively, while each cut its price target from its previous estimate. The October 26 revisions thus combine continued positive ratings from both institutions with a more cautious assessment of the price target.