AU Small Finance Bank Q4 net profit doubles as provisions fall

AU Small Finance Bank doubled its net profit for the January-March quarter to Rs 346 crore from Rs 169 crore a year ago as its business expanded and provisions declined by over a third. The bottom line was in line with estimates by analysts.

The company also declared a bonus share issue in the ratio of 1:1 "to celebrate successful completion of five years” of its banking operations. It also declared a dividend of Rs 1 per share (pre-bonus).

The lender's provisions and contingencies fell 37% from a year ago to Rs 93.2 crore during the quarter as asset quality slowly sheds the baggage of COVID ravages.

Gross non-performing asset ratio contracted to 1.98% at the end of March from 2.60% a quarter ago and 4.25% a year ago. Net non-performing asset ratio contracted to 0.50% at the end of March from 1.29% a quarter ago and 2.18% a year ago.

Net interest margin (NIM) of India's largest small finance bank was at 6.3% in the January-March quarter, against 5.7% a year ago.

Provision coverage ratio (PCR) was at 75%.

AU Small Finance Bank's deposits crossed Rs 50,000 crore for the first time and its quarterly disbursement were at a record high of Rs 10,295 crore.

The bank’s total balance sheet grew 34% from a year ago to Rs 69,078 crore at the end of the financial year.

Other key highlights

1) The deposit base was at Rs 52,585 crore as on Mar 31, up 46% from a year ago and 19% from Dec 31.

2) Consistent collection efficiency in excess of 100% for every month of the quarter

3) Total CRAR was at 21.0% against minimum requirement 15%, and tier-I capital ratio at 19.7% against minimum requirement 7.5%.

4) Net profit for FY22 was at Rs 1,130 crore and net interest income at Rs 3,234 crore

5) Collection efficiency averaged 106% for full FY22

Management Commentary

"Our financial performance in the current quarter has been quite strong and we have used the headroom available, judiciously, to secure our future by tightening our provisioning policy, increasing our coverage ratio, creating floating provision and expanding our Board," AU Small Finance Bank Managing Director and Chief Executive Officer Sanjay Agarwal said.

"This coupled with investments in people, digital assets and brand-building have enabled us to build a customer-centric, future ready bank. I believe that we are rightly positioned to take advantage of the emerging major opportunities in our core segments. We remain watchful regarding risks around inflationary pressures and geo-political risks and Covid, and remain cautiously optimistic in our approach,” he added.