AU Small Finance Q1 FY27 Results (NSE: AUBANK)
Signal: Earnings grew
The read
Asset quality improvement (GNPA 2.10% vs 2.47% YoY) and NIM expansion (NII +31.8% YoY) drove PAT growth of 37%, though cost-to-income rose 282bps YoY, signaling branch/people investments ahead of the universal bank transition.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹5,991.96 Cr | 15.47% | 4.20% |
| EBIT | ₹1,435.47 Cr | 9.39% | |
| Net profit | ₹795.95 Cr | 37.03% | |
| EPS | ₹10.63 | 36.28% |
P&L walk
NII growth of 31.8% YoY drives operating profit; provisions fell sharply YoY (down 30.3%) lifting PAT growth above operating profit growth.
Segments
Retail banking segment remains the profit engine (₹66,425 lakh, +145.8% YoY) driven by a sharp YoY turnaround in other retail banking; treasury segment profit fell 62.4% YoY to ₹10,866 lakh on lower treasury income.
Key positives
- Net profit ₹79.60 Cr, +37.0% YoY, fastest in recent quarters, aided by lower provisions (-30.3% YoY).
- Asset quality improved: GNPA 2.10% (vs 2.47% YoY), NNPA 0.76% (vs 0.88% YoY) — credit costs falling.
- NII grew 31.8% YoY to ₹269.55 Cr, implying NIM expansion of ~67bps YoY.
- Capital adequacy remains strong at 18.93% (vs 19.42% YoY), well above regulatory minimum.
- Universal bank transition in progress: final license application submitted March 2026, NOFHC requirement removed.
Key concerns
- Cost-to-income ratio worsened to 32.52% from 29.70% a year ago — operating expenses grew 26.3% YoY, outpacing revenue growth of 15.5%.
- Other income fell 15.0% YoY to ₹68.92 Cr, drag from lower treasury gains/PSLC income.
- GNPA sequentially up 7bps from 2.03% in Q4FY26 — small increase but warrants monitoring.
- Provision coverage (implied) dipped to 64.1% from 64.9% QoQ.
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