AU Small Finance Bank Q2 net profit jumps 53% to ₹858 crore, NII rises 32%

AU Small Finance Bank on Saturday reported a 53% year-on-year rise in net profit to ₹858 crore for the second quarter of FY27, supported by an improvement in interest income and net interest income.

The lender had posted a net profit of ₹561 crore in the corresponding quarter of the previous fiscal. Total income increased to ₹6,382 crore in the July-September quarter from ₹5,224 crore a year earlier, according to a regulatory filing.

Interest income and net interest income rise

Interest income grew to ₹5,612 crore in the September quarter from ₹4,511 crore in the year-ago period, reflecting an increase in the bank’s earnings from lending and other interest-generating assets.

Net interest income (NII), the difference between interest earned and interest paid, rose 32% year-on-year to ₹2,820 crore from ₹2,144 crore in the corresponding quarter of FY26.

The bank’s net interest margin (NIM), which measures the income earned from interest-generating assets relative to their value, improved to 5.8% at the end of September 2026, compared with 5.5% a year earlier.

The growth in NII and the improvement in NIM indicate stronger interest earnings during the quarter, alongside the rise in overall income.

Gross and net NPAs decline

AU Small Finance Bank also reported an improvement in asset quality, with its gross non-performing assets (NPAs) declining to 1.99% of gross advances at the end of the September quarter, compared with 2.41% a year earlier.

Net NPAs, which account for provisions against bad loans, moderated to 0.81% from 0.88% in the corresponding period of the previous fiscal.

The reduction in both gross and net NPAs indicates an improvement in the proportion of loans classified as non-performing. However, the bank’s capital adequacy ratio declined marginally to 18.54% at the end of September 2026 from 18.78% a year earlier.

CEO highlights growth and profitability

Commenting on the results, AU Small Finance Bank MD and CEO Sanjay Agarwal said the quarter’s performance reflected the institution the lender was building, combining growth with profitability and ambition with prudence.

He added that balanced franchise growth, improving profitability and stable asset quality reinforced confidence in the bank’s foundations for sustained, long-term performance.

About AU Small Finance Bank

Headquartered in Jaipur, Rajasthan, AU Small Finance Bank is a scheduled commercial bank that evolved from AU Financiers, a non-banking finance company established in 1996. The bank commenced small finance bank operations in April 2017. It provides banking and financial services to retail customers, micro, small and medium enterprises (MSMEs) and businesses, with offerings spanning deposits, loans, digital banking and other financial products. (With Inputs from PTI)