AU Small Finance Bank Q4 Results: Focus on NIM Pressure and Credit Card Slippages

AU Small Finance Bank is set to report its fourth quarter and full-year financial results for the 2024 fiscal year on April 24. Investors and analysts are closely watching the bank's performance, with a particular focus on its net interest margin (NIM) pressure and any slippages in its credit card book.

The bank has announced that it will hold a conference call to discuss the financial results, with the audio recording made available. Additionally, AU Small Finance Bank has released its investor presentation and a press release related to the quarterly and annual results.

In the March quarter, AU Small Finance Bank reported a 12.7% fall in profit at Rs 371 crore, largely due to increased provisions and a one-time expense related to the acquisition of Fincare Small Finance Bank. Excluding exceptional items, the bank's net profit stood at Rs 428 crore, representing a modest 1% increase compared to the previous year.

The bank's total income rose to Rs 3,385 crore, while its Net Interest Income (NII) grew by 10% to reach Rs 1,337 crore. However, the bank's asset quality saw a marginal deterioration, with gross NPA at 1.67% and net NPA at 0.55%. The merger with Fincare, which has received all regulatory approvals, resulted in a one-time exceptional expenditure of Rs 76.80 crore for AU Small Finance Bank. The combined entity now has 2,383 physical touchpoints across India.

Why this matters: AU Small Finance Bank's Q4 results provide insights into the performance and challenges faced by small finance banks in India. The bank's ability to manage NIM pressure and maintain asset quality, particularly in its credit card portfolio, is crucial for its long-term growth and stability in the competitive banking sector.

Despite the consistent growth in net interest income over the past five quarters, reaching a high of Rs 1,337.03 crore, AU Small Finance Bank's financial performance in the March 2024 quarter has been mixed. The bank's profit before tax less other income fell by 151.16% year-on-year, while its operating profit has decreased each quarter over the last five quarters. The profit after tax also showed a negative trend, with a 12.7% year-on-year decline. The high reliance on non-operating income, which accounts for 122.16% of the profit before tax, raises concerns about the bank's core business activities.

Key Takeaways

• AU Small Finance Bank to report Q4 and FY24 results on April 24.
• Q4 profit fell 12.7% to Rs 371 cr due to higher provisions, one-time expense.
• NII grew 10% to Rs 1,337 cr, but asset quality deteriorated marginally.
• Merger with Fincare resulted in one-time exceptional expense of Rs 76.80 cr.
• Concerns over high reliance on non-operating income and declining operating profit.