AU Small Finance Bank Limited (AUBANK) — Financial Results

📢 Key Event
AU Small Finance Bank reports Q4 FY26 profit of ₹832 crores, up 65% YoY, with margin expansion and improved asset quality.

🔄 What Changed
Margin expanded 24 bps QoQ to 5.96%; GNPA declined 27 bps to 2.03%; slippages fell 17% QoQ to ₹659 crores; cost of funds dropped 12 bps QoQ to 6.49%; full-year profit grew 25% YoY to ₹2,641 crores.

🔮 What's Next
Target ROA of 1.8% in FY27; sustainable credit cost guidance of ~90 bps; plan to add 80-100 branches annually; cost-to-asset ratio target of 3.5% within 3-5 years (from 4.1%); deposit growth to sustain 60% retail share; commercial lending book to grow; ECL guidelines to be implemented from April 2027.

💡 Investor Takeaway
Shareholders benefit from strong profit growth, margin expansion, and improving asset quality, supported by strategic AI adoption and branch expansion for long-term ROA sustainability.

AU Small Finance Bank reported Q4 FY26 net profit of ₹832 crores (+25% QoQ, +65% YoY) and full-year profit of ₹2,641 crores (+25% YoY), with ROA at 1.8% and ROE at 14.2%. Margin expanded by 24 bps QoQ to 5.96%, driven by deposit growth of 10% QoQ (23% YoY) and loan growth of 8% QoQ (21% YoY). GNPA improved to 2.03% (-27 bps QoQ), while slippages declined to ₹659 crores (-17% QoQ). Cost of funds fell to 6.49% in Q4 (-12 bps QoQ) and 6.75% for the full year (-32 bps YoY). The bank proposed a dividend of [amount context mismatch] per share and highlighted AI-driven efficiency gains targeting a 3.5% cost-to-asset ratio within 3-5 years (from 4.1% currently). It plans to add 80-100 branches annually, expand retail deposits (60% of total), and grow commercial lending (₹31,000 crores, +29% YoY). Asset quality remains stable with PCR improving, and MFI portfolio 92% covered under CGFMU. ROA of 1.8% in FY27 is seen as temporary, with sustainable credit cost guidance at ~90 bps.