AU Small Finance Bank Q2FY22 Results: Profit falls 13% YoY to Rs 279 cr due to high bad loans

AU Small Finance Bank on Thursday reported 13 per cent decline in net profit at Rs 279 crore for September quarter 2021-22 due to rise in bad loans.

The lender had posted a net profit of Rs 322 crore for the year-ago period.

However, the bank said the net profit was up 42 per cent year-on-year after excluding the profit earned from stake sale in Aavas Financiers.

There was a gain of Rs 144 crore due to stake sale in Aavas in second quarter of 2020-21 and overall gain was of Rs 172 crore in first half of that fiscal year.

Total income rose to Rs 1,595.65 crore during the quarter under review as against Rs 1,473.45 crore in the same period of 2020-21, AU Small Finance Bank said in a regulatory filing.

Net income rose 15 per cent to Rs 944 crore while net interest income grew 34 per cent to Rs 753 crore.

The bank's other income also moved up by 64 per cent to Rs 191 crore. However, employee cost too went up by 46 per cent to Rs 327 crore during the quarter.

Gross bad loans or non-performing assets (NPAs) of the bank surged to 3.16 per cent of gross advances by end of September 2021 from 1.54 per cent by the year-ago period. However, it was down from 4.31 per cent by the end of June quarter.

In absolute value, gross NPAs stood at Rs 1,151.45 crore as compared to Rs 423.17 crore.

Net NPAs too increased to 1.65 per cent (Rs 591.48 crore) from 0.45 per cent (Rs 122.83 crore). It was 2.26 per cent by the end of June 2021.

However, provisions for bad loans and contingencies for the quarter were reduced sharply to Rs 3.60 crore from Rs 32.71 crore in year-ago quarter.

It restructured Rs 80 crore (0.2 per cent) worth of advances during the quarter under review.

The bank said it is continuing to build its technology team and over 100 resources are being hired in development and support roles.

"Q2FY22 was a remarkable quarter across most parameters with significant improvement visible in the operating environment, borrower connect and cashflows, and overall confidence in the system," Sanjay Agarwal, MD & CEO, AU Small Finance Bank said.

He said with increasing granularity of deposits, and growing reach, the bank is well positioned to take advantage of the significant opportunities in the segments it is present in.

AU SFB stock closed 3.26 per cent down at Rs 1226.30 on BSE.