CITI has retained a ‘Neutral’ rating on AU Small Finance Bank, with a target price of ₹625, following a mixed Q4FY25 performance. The bank reported a net profit of ₹503.7 crore, down 4.7% QoQ, while NII rose 3.5% to ₹2,093.9 crore.
CITI noted that the bank delivered a steady 1.36% return on assets (RoA), in line with its expectations. However, credit cost rose to 2.5% versus 2.06% in Q3, as the bank made accelerated provisions of ₹1,500 crore, including full provisioning on unsecured GNPA accounts.
While fee income was strong, up 15% sequentially, and treasury gains of ₹100 crore supported provisioning, net NPA fell to 0.74% from 0.91% QoQ, and gross NPA stood at 2.28%. CITI expects NIMs to stabilise at 5.7% over FY26E/FY27E, although pressure from asset mix changes persists.
The bank’s universal banking license review is underway, and CITI anticipates approval in calendar year 2026 (CY26).
Disclaimer: The above views are of the broker’s and not the author or the publication’s. Please make any and every investment decision after consulting your financial advisor.
