AU Small Finance Bank reported net profit of Rs 858 crore for the September 2026 quarter, up 53% from Rs 561 crore a year earlier. Business expansion, a wider net interest margin and lower provisions supported the earnings increase as the lender continued its transition toward becoming a universal bank.
Key Takeaways
- Net profit grew faster than both loans and deposits in the second quarter.
- Provisions fell 25% as gross and net bad-loan ratios improved.
- Deposits expanded 29% year on year, outpacing loan growth of 25%.
Table of Contents
- AU Small Finance Bank earnings strengthen on two fronts
- Lower provisions accompany better asset quality
- Deposit growth exceeds lending expansion
- Conclusion
AU Small Finance Bank earnings strengthen on two fronts
The second-quarter results for fiscal 2026–27 showed stronger underlying interest earnings alongside a smaller provisioning charge. Net profit increased by Rs 297 crore compared with the September 2025 quarter.
Net interest income—the difference between interest earned and interest paid—rose 32%. The bank also earned a wider net interest margin, indicating that the improvement extended beyond simply having a larger lending business.
The bank’s quarterly financial reports archive provides access to financial results, earnings releases and investor presentations by fiscal year. The archive lists FY 2026–27, although its accessible page does not display the quarter’s underlying financial figures.
| Item | Details |
|---|---|
| Reporting period | Second quarter of FY 2026–27, ended September 2026. |
| Net interest income | Rs 2,820 crore, compared with Rs 2,144 crore a year earlier. |
| Net interest margin | 5.8%, compared with 5.5% a year earlier. |
| Pre-provision operating profit | Rs 1,514 crore, compared with Rs 1,210 crore a year earlier. |
Lower provisions accompany better asset quality
Provisions declined to Rs 359 crore from Rs 481 crore a year earlier. The lower charge helped profit growth outpace the expansion in net interest income.
The gross non-performing asset ratio fell by 42 basis points to 1.99% at the end of September, while the net non-performing asset ratio improved by seven basis points to 0.81%. One basis point equals one-hundredth of a percentage point.
Annualised credit cost stood at 0.8%, compared with 1.2% a year earlier. Together, the lower bad-loan ratios and reduced provisioning show that balance-sheet expansion was accompanied by improving asset-quality measures.
Deposit growth exceeds lending expansion
The gross loan portfolio increased 25% year on year to Rs 1.54 lakh crore, while total deposits rose 29% to Rs 1.70 lakh crore. Deposits therefore grew faster than lending and remained larger than the gross loan book.
Founded in 1996 as a vehicle financier, AU is now India’s largest small finance bank. Its transformation into a universal lender remains in progress, rather than a completed change.
Conclusion
AU Small Finance Bank’s September-quarter profit improvement combined stronger interest earnings with lower provisioning. Its ongoing transition to a universal lender remains the next corporate milestone to watch; the supplied information gives no completion date.
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