Jaipur-based AU Small Finance Bank on Wednesday reported a 23% year-on-year increase in its net profit to Rs 343 crore for the July-September quarter. Provisions rose to Rs 43 crore from Rs 5 crore in the previous year.
The bank’s pre-provisioning operating profit grew 27%, led by a strong growth in net interest income (NII) and other income. The NII grew 44% to Rs 1,083 crore. The net interest margin improved marginally to 6.2% compared to 5.9% in the previous year. The incremental spread on advances remained stable at 7% which offset the increase in incremental borrowing cost. The bank also securitised loan assets worth Rs 715 crore to optimise borrowing costs.
The gross non-performing asset (NPA) ratio stood at 1.90% as of September 30, compared to 1.96% a quarter ago and 3.16% a year ago. The net NPA ratio was at 0.56%, flat sequentially and compared with 1.65% a year ago. Provision coverage ratio was at 71%, compared to 72% a quarter ago. The bank also saw an improvement in collection efficiency, which averaged 108% in Q2FY23, aiding improvement in the asset quality.
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“The bank witnessed a growth of 6% QoQ in its gross advances to Rs 52,452 crore in Q2FY23. This, coupled with a consistent collection efficiency of 108% for the quarter, resulted in sustained improvement in asset quality ratios,” the lender said in a release.
The bank’s capital adequacy ratio stood at 23.4% as of September 30, with tier-I capital at 21.3%. The bank’s CRAR was at 22% in the year-ago period. The lender raised Rs 2,500 crore in August, of which Rs 2,000 crore was tier-I. The bank remains well capitalised to face global headwinds.