AU Small Finance Bank shares slump 7% after Q1 margins shrink
AU Small Finance Bank
fell as much as 7.3% on Monday to Rs 736.95 on the BSE after the lender reported a mixed set of earnings for the June quarter, with shrinking margins and deteriorating asset quality overshadowing a 16% rise in net profit.
Net profit rose to Rs 581 crore for the April–June quarter, up from Rs 503 crore a year ago, driven by strong treasury gains. However, the bank's core lending performance showed strain, with net interest margin (NIM) narrowing by 38 basis points to 5.4%.
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'Net interest margins have started to shrink as banks began to transmit the rate cuts,' the bank said in a stock exchange filing.
Net interest income (NII), a key measure of a bank's profitability, grew 6% year-on-year to Rs 2,045 crore from Rs 1,921 crore.
Asset quality weakened during the quarter, with the gross non-performing assets (GNPA) ratio rising to 2.47% from 1.78% a year earlier. This led to a sharp increase in provisions, which surged to Rs 533 crore from Rs 283 crore in the year-ago period.
Despite pressure on margins, the bank reported a robust 38% growth in pre-provision operating profit at Rs 1,312 crore compared to Rs 952 crore a year earlier. This was supported by a 59% jump in other income, which stood at Rs 811 crore. The bank booked Rs 289 crore in treasury gains during the quarter, significantly higher than Rs 40 crore in the same period last year.
AU Bank's gross loan portfolio expanded 18% year-on-year to Rs 1.18 lakh crore, even as its unsecured segments, comprising microfinance and credit cards, saw a 23% decline. Total deposits grew 31% over the same period to Rs 1.28 lakh crore.
Stock performance and technical indicators
Shares of
AU Small Finance Bank
have gained 3.9% so far in 2025. The stock is up 7.6% in the past six months, and over 1% in the last 12 months, though it has slipped 1% in the last month.
Technically, the stock is trading below its 5-day, 10-day, 20-day, and 30-day simple moving averages, while holding above its 50-day, 100-day, 150-day, and 200-day SMAs. The Relative Strength Index (RSI) at 50.1 indicates neutral momentum. The Moving Average Convergence Divergence (MACD) is at 10.9, above the center line but below the signal line.
Also read |
RBL Bank Q1 Results: Net profit falls 46% YoY to Rs 200 crore; NII down 13%
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