AU Small Finance Bank Q1 results were up by 32% and down 23% sequentially.

AU Small Finance Bank Q1 results were up by 32% and down 23% sequentially.

AU Small Finance Bank, a Jaipur-based lender, reported a net profit of Rs. 268 crores with a jump of 32% from 203 crores YOY but was down by 23% sequentially from Rs. 346 crores in March 2022. This result was achieved on account of an improvement in interest income and a sharp fall in provisions. The bank made provisions of Rs. 38 Cr., lower by 81% from a year ago on account of improvement in the asset quality and COVID-19 related provisions.

The bank’s PPoP was at Rs. 394 Cr, down by 18% as other incomes fell and operating expenses rose. The other income fell to Rs. 159 Cr. and was down by 26% due to losses of Rs. 55 Cr. in the treasury operations. The net interest income was reported to have increased by 35% from Rs.924Cr. to Rs.976Cr. The quarterly net interest margin (NIM) was lower by 1 bib from 6% to 5.9% YOY. It intends to maintain the NIM in the current fiscal year due to the rise in floating rates, which is 25% of the book. The asset quality for the bank also improved. Net NPS was at 0.56% on 30 June, down from 2.26% in Q1 FY23. The provision coverage ratio rose from 49% earlier to 72% by June 30. The AUM grew to Rs. 50161 Cr. with a jump of 37% YOY. The deposits witnessed a growth of 48% to Rs. 54,631 Cr. in the June quarter. The company’s market share is only 3% in the banking system and is optimistic about its growth. Almost 90% of the portfolio is secured, which is a good sign.

The banks’ (CAR) stood at 19.4% versus 23.1% in June 2021. The EPS was recorded at Rs. 4.25, which was down from Rs. 11.02 in the previous quarter. The key risks for the bank are surging inflation, resulting in widening losses; exposure to the informal sector; regional dependence on one state; and a slowdown in the economy. However, since the bank primarily serves the underserved category like farmers, low-wage earners, and the informal sector, it provides them with pricing power. As the monsoon was on time, it is likely to be favorable for the bank, since the farmers will be in a better position to repay the debt.

The script gave a 3-year return of 75.01% as compared to the 44.23% return given by the Nifty 100. The market cap for the company is Rs. 37,4111Cr. The stock is currently trading at Rs. 593.65, up by 16 points, or 2.84%, and has touched an intraday high of Rs. 601 and a low of Rs. 570. The 52-week high was at Rs. 732.98 and the 52-week low was at Rs. 462.