Latest news with #AUSmallFinanceBankLtd
Mint
25-04-2025
- Business
- Mint
AU Small Finance is in repair mode, but net interest margin could be a challenge
AU Small Finance Bank Ltd investors have entered FY26 with mixed feelings. While the anticipates elevated credit cost in the first half of the year, the management expects an improvement in the second half. Credit cost (on average total assets) stood at 1.3% in FY25 due to increased stress in unsecured portfolios, mainly microfinance (MFI) and credit cards. What offers comfort is that AU Small Finance Bank has seen an improvement in collection efficiency in the MFI portfolio and expects the trend to continue in FY26. Also, slippages eased to 3.62% in the March quarter (Q4FY25) from 4.06% in Q3FY25. MFI credit cost is seen declining to 3.5% in FY26 versus 7.7% in FY25. What's more, the bank is exercising caution and pursuing balanced growth in the unsecured segment. It looks to cap the MFI book at 10% of the total portfolio, while the entire unsecured segment exposure would be capped at 15%. All new disbursals are expected to be Credit Guarantee Fund for Micro Units (CGFMU)-insured. Roughly 36% of the current MFI portfolio is already covered under CGFMU. To tackle stress in the credit card portfolio , the bank has tightened the underwriting and credit filters, thus limiting credit card issuance, which stands at around 10,000 versus 40,000-45,000 cards earlier. Credit card credit cost is seen declining to 6-7% in FY26 from 11% in FY25. Overall, credit cost (on average total assets) could fall to around 85 basis points in FY26 and 75 bps in FY27. However, tight control on costs and efforts on improving asset quality should translate into meaningful improvement in credit costs, paving way for the bank to reach its return on asset (RoA) target of 1.8% by FY27 from 1.5% in FY25. For now, the management didn't give RoA guidance for FY26. The management expects the credit card business to breakeven by FY27 and that should contribute to overall RoA from FY28 onwards. Also Read: AU Small Finance Bank—weighed down by industry headwinds, but set for a turnaround That said, net interest margin (NIM) would be a challenge in FY26. The management acknowledged the likely NIM pressure as a 50bps rate repo cut would put pressure on near-term NIM outlook given around 30% floating rate book. AU has already cut the savings account rate by 25bps in April, but it is not looking to cut savings account rates in near-term. NIM fell 10bps sequentially in Q4FY25 to 5.8% as a higher proportion of low-yielding secured loans weighed on spreads. 'While credit cost is unlikely to normalize soon, we expect it to decline enough to offset any pressure from a declining NIM—and probably more," said Kotak Institutional Equities report on 23 April. Even so, given the broader macro uncertainty, the brokerage prefers to wait and establish a recovery in the core secured businesses before turning more positive. But it acknowledges that the discomfort with valuations has declined. Meanwhile, the bank expects to receive a universal bank licence in 2025. This would support growth, boost market positioning and enable better deposit mobilisation at a more favourable cost. That said, according to Emkay Global Financial Services , the bank's plan to transition toward secured loans and elevated operational cost in the run-up to its transition into a universal bank could limit RoA to 1.5-1.6% over FY26-28E. In the last one year, the stock is up around 12%, trajectory of margin and asset quality trends in mainly in unsecured portfolios would decide the stock's trajectory ahead. Also Read: MFI stress may weigh on small finance banks' loan growth, asset quality in short term
Business Standard
23-04-2025
- Business
- Business Standard
HCL Technologies Ltd leads gainers in 'A' group
Latent View Analytics Ltd, AU Small Finance Bank Ltd, Choice International Ltd and Coforge Ltd are among the other gainers in the BSE's 'A' group today, 23 April 2025. Latent View Analytics Ltd, AU Small Finance Bank Ltd, Choice International Ltd and Coforge Ltd are among the other gainers in the BSE's 'A' group today, 23 April 2025. HCL Technologies Ltd spiked 7.90% to Rs 1597 at 11:47 IST. The stock was the biggest gainer in the BSE's 'A' group. On the BSE, 4.36 lakh shares were traded on the counter so far as against the average daily volumes of 1.44 lakh shares in the past one month. Latent View Analytics Ltd surged 7.46% to Rs 421.4. The stock was the second biggest gainer in 'A' group. On the BSE, 63658 shares were traded on the counter so far as against the average daily volumes of 53465 shares in the past one month. AU Small Finance Bank Ltd soared 6.46% to Rs 652.9. The stock was the third biggest gainer in 'A' group. On the BSE, 3.36 lakh shares were traded on the counter so far as against the average daily volumes of 94108 shares in the past one month. Choice International Ltd advanced 6.29% to Rs 597.95. The stock was the fourth biggest gainer in 'A' group. On the BSE, 1.15 lakh shares were traded on the counter so far as against the average daily volumes of 39572 shares in the past one month. Coforge Ltd exploded 6.13% to Rs 7380.85. The stock was the fifth biggest gainer in 'A' group. On the BSE, 57419 shares were traded on the counter so far as against the average daily volumes of 30331 shares in the past one month.
Business Standard
23-04-2025
- Business
- Business Standard
Volumes spurt at Sunteck Realty Ltd counter
Sunteck Realty Ltd registered volume of 25353 shares by 10:47 IST on BSE, a 2.83 fold spurt over two-week average daily volume of 8973 shares AU Small Finance Bank Ltd, Tata Communications Ltd, Varroc Engineering Ltd, Havells India Ltd are among the other stocks to see a surge in volumes on BSE today, 23 April 2025. Sunteck Realty Ltd registered volume of 25353 shares by 10:47 IST on BSE, a 2.83 fold spurt over two-week average daily volume of 8973 shares. The stock rose 1.04% to Rs.407.25. Volumes stood at 9534 shares in the last session. AU Small Finance Bank Ltd witnessed volume of 2.85 lakh shares by 10:47 IST on BSE, a 2.42 times surge over two-week average daily volume of 1.18 lakh shares. The stock increased 5.21% to Rs.645.25. Volumes stood at 1.58 lakh shares in the last session. Tata Communications Ltd saw volume of 45748 shares by 10:47 IST on BSE, a 2.4 fold spurt over two-week average daily volume of 19038 shares. The stock dropped 0.98% to Rs.1,582.20. Volumes stood at 28720 shares in the last session. Varroc Engineering Ltd recorded volume of 19437 shares by 10:47 IST on BSE, a 2.3 times surge over two-week average daily volume of 8434 shares. The stock gained 1.75% to Rs.459.80. Volumes stood at 14420 shares in the last session. Havells India Ltd saw volume of 1.56 lakh shares by 10:47 IST on BSE, a 2.27 fold spurt over two-week average daily volume of 68874 shares. The stock dropped 3.51% to Rs.1,606.30. Volumes stood at 37368 shares in the last session.
