AU Small Finance Bank reports steady Q2’FY24 performance: A detailed insight

AU Small Finance Bank (AU Bank) exhibited a consistent operating outcome in Q2’FY24, navigating a challenging macro backdrop with liquidity constraints and ongoing inflation. The bank marked a 30% YOY rise in deposits, a 24% YOY surge in advances, and a 17% YoY increment in net profit. Return on Assets (RoA) and Return on Equity (RoE) were pegged at 1.7% and 13.9%, respectively.

Performance Amidst Macroeconomic Uncertainties

In the context of Q2’FY24, domestic inflationary pressures lingered, and the August monsoon trajectory remained subpar compared to historical data. This, combined with a volatile global macro scene, ensured heightened interest rates and constricted liquidity. Yet, amidst these odds, AU Small Finance Bank consistently showcased growth across deposit mobilization, credit growth, and digital engagement. The Bank launched a brand campaign titled “Soch Badlo aur Bank Bhi,” emphasizing the “Badlaav Humse Hai” philosophy to strengthen its brand association.

Q2’FY24 Profitability Metrics

For Q2’FY24, Pre-provisioning Operating Profit saw a 30% YoY spike to ₹ 648 Crore, while Net Interest Income climbed 15% to ₹ 1,249 Crore. The Net Interest Margin for this period was set at 5.5%. Interestingly, despite these growth numbers, the bank’s Cost of Funds inched up by 12bps QoQ, resting at 6.70%.

Deposit Overview for Q2’FY24

The total deposits for AU Small Finance Bank surpassed the ₹ 75,000 Crore milestone this quarter, registering a 30% YoY and 9% QoQ growth. Concurrently, the CASA deposits increased by 4% YoY to ₹ 25,666 Crore, leading to a CASA ratio of 34%. During this quarter, the bank adjusted the FD and SA rates upwards by 25 basis points in specific segments.

H1’FY24 Key Performance Indicators

For H1’FY24, AU Bank’s pre-provisioning operating profit surged 34% YoY to ₹ 1,194 Crore. The Net Interest Income rose by 21% YoY to ₹ 2,495 Crore, and the Net Interest Margin was noted at 5.6%.

Sanjay Agarwal Weighs in on Global and Domestic Economic Scenarios

Sanjay Agarwal, MD & CEO of AU Small Finance Bank, shared his perspective on the ongoing global challenges, pointing out geo-political tensions, supply chain disruptions, and inflationary pressures. While acknowledging India‘s economic resilience, Agarwal emphasized the need for vigilance, given the prevalent inflation, liquidity concerns, and unpredictable weather patterns.