AU Small Finance Bank Q2 net profit jumps 53% to Rs 858 crore on robust interest income

AU Small Finance Bank has reported a 53% jump in second-quarter net profit to Rs 858 crore, reflecting the ongoing strength and stability of India's banking sector.

The lender had recorded a net profit of Rs 561 crore in the corresponding quarter of the previous financial year, according to a regulatory filing. Total income for the quarter ended 30 September 2026 rose to Rs 6,382 crore, up from Rs 5,224 crore a year earlier, driven by sustained credit demand and robust business expansion.

Financial performance at a glance

Core income metrics showed steady gains over the period, with net interest income rising by 32% to Rs 2,820 crore.

Net interest margin—a critical indicator of profitability—widened to 5.8% from 5.5% a year ago. Pre-provision operating profit grew 28% year-on-year to Rs 1,514 crore, up from Rs 1,210 crore.

Asset quality and balance sheet expansion

Asset quality across the bank's loan book improved significantly over the year. Gross non-performing assets declined by 42 basis points to 1.99% of gross advances, compared with 2.41% at the end of September 2025.

Net bad loans moderated to 0.81% from 0.88% in the year-ago period. Reflecting the reduction in stressed assets, provisions fell 25% to Rs 359 crore from Rs 481 crore, while annualised credit cost eased to 0.8% from 1.2%.

The bank's balance sheet showed broad-based growth across deposits and advances. Gross loans expanded 25% year-on-year to reach Rs 1.54 lakh crore, while total deposits surged 29% to Rs 1.70 lakh crore. Capital adequacy stood at a healthy 18.54%, providing a sturdy cushion for ongoing expansion as the bank works toward transforming into a universal lender.

Management outlook

Commenting on the performance, AU Small Finance Bank Managing Director and Chief Executive Officer Sanjay Agarwal said the quarter's results showcase an institution built on growth alongside financial discipline.

"This quarter's performance is a reflection of the institution we are steadily building, one that combines growth with profitability, and ambition with prudence," Agarwal said in a statement. He added that balanced growth across franchises and stable asset quality reinforce confidence in sustained long-term delivery.

Founded in 1996 as a vehicle finance institution, AU Small Finance Bank has grown to become the largest small finance bank in the country.