AU Small Finance Q2 FY27 Results (NSE: AUBANK)
Signal: Earnings grew
The read
The trajectory remains constructive: Q2 PAT reached ₹858 crore, up 53% YoY versus 37% YoY in Q1FY27, while NII grew 32% YoY and credit cost improved 45bps to 0.8%. Deposit growth of 28.6% exceeded loan growth of 25.1%, and GNPA improved 42bps to 1.99%, indicating that faster balance-sheet expansion is being accompanied by stronger funding and asset-quality metrics.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| EBIT | ₹1,480 Cr | +31% | |
| Net profit | ₹858 Cr | +53% | |
| EBIT margin | 0% |
P&L walk
Standalone operating momentum strengthened: NII grew 32% YoY to ₹2,820 crore, core PPoP rose 31% to ₹1,480 crore and PAT increased 53% to ₹858 crore, helped by a 43bps reduction in cost of funds and a 45bps improvement in credit cost.
Key positives
- NII grew 32% YoY to ₹2,820 crore while NIM expanded 33bps to 5.8%, aided by a 43bps decline in cost of funds to 6.41%.
- PAT grew 53% YoY to ₹858 crore, ahead of 31% core PPoP growth because net provisions declined 25% to ₹359 crore.
- Deposits increased 28.6% YoY to ₹1,70,460 crore, with CASA up 29.1% to ₹50,289 crore and stable deposits forming 79% of total deposits.
- Asset quality improved as GNPA declined 42bps YoY to 1.99%, NNPA declined 7bps to 0.81% and credit cost fell 45bps to 0.8%.
- The bank added 183 net touchpoints, including 45 liability branches and 100+ asset centres, taking the network to 3,103 touchpoints across 21 states and 4 UTs.
Key concerns
- Gross advance yields declined 27bps YoY because of portfolio-mix changes, creating a risk that further mix shifts could offset funding-cost benefits.
- Total operating expenses grew 26% YoY to ₹2,077 crore as the bank continued investing behind its 28.6% deposit and 25.1% loan growth.
- Unsecured businesses grew 22.9% YoY, below secured loan growth of 25.9%; the future credit-cost trajectory remains important despite Q2 credit cost improving to 0.8%.
Research and educational content only. Not investment advice.