AU Small Finance Bank reported a strong set of numbers for the March quarter, with profit and margins improving alongside steady growth across key business segments. The lender posted a net profit of ₹832 crore in Q4 FY26, marking a 65% year-on-year increase and a 25% sequential rise, reflecting improved operating performance and lower provisioning.
A key highlight for the quarter was the expansion in net interest margin (NIM), which rose to 5.96% in Q4 FY26 from 5.7% in the previous quarter, supported by better yield management and declining cost of funds. The bank’s cost of funds fell to 6.4% from 6.49% in Q3, aiding margin expansion.
Net interest income (NII) grew 23% year-on-year and 10% quarter-on-quarter to ₹2,582 crore, driven by robust loan growth and stable asset yields. Core fee and other income also remained healthy, rising 14% year-on-year and 7% sequentially to ₹748 crore, indicating continued traction in non-interest income streams.
On the asset quality front, the bank reported improvement on a sequential basis. Gross NPA ratio declined to 2.03% as of March 2026 from 2.30% in December 2025, while net NPA stood at 0.74% compared to 0.88% in the previous quarter. Credit cost for FY26 improved to 0.96% of average assets, reflecting better risk management and recoveries.
The bank continued to see strong balance sheet growth during the quarter. Total deposits increased 23% year-on-year and 10% quarter-on-quarter to ₹1,52,661 crore, with CASA deposits rising 20% annually. The gross loan portfolio grew 21% year-on-year and 8% sequentially to ₹1,40,327 crore, led by secured segments including retail and commercial lending.
Operationally, AU Small Finance Bank expanded its footprint with the addition of 64 physical touchpoints during the quarter, taking the total network to 2,790 locations. The bank also introduced its first AI-native loan origination system for gold loans, marking a step towards greater digitisation and efficiency.
For the full financial year FY26, the bank reported a net profit of ₹2,641 crore, up 25% year-on-year. The board has recommended a dividend of ₹1 per share for the year.
Management commentary highlighted that the bank delivered an “all-round performance” despite macro volatility, with a strong foundation, improving fundamentals, and continued investments in technology and distribution expected to support future growth.