AU Small Finance Bank Reports Strong Q3 FY26 Performance; Profit Jumps 26%, Deposits and Loans Grow Over 19%

New Delhi: AU Small Finance Bank announced a solid financial performance for the third quarter of FY26, driven by healthy loan growth, rising deposits, improving margins, and better asset quality. The bank shared its Q3 FY26 earnings presentation with stock exchanges following investor and analyst interactions.

Profitability Shows Strong Momentum

For Q3 FY26, AU Small Finance Bank reported a 26% year-on-year (YoY) rise in net profit to ₹668 crore, compared with ₹528 crore in the same quarter last year. On a quarter-on-quarter basis, profit increased by 19%, supported by higher net interest income and lower credit costs.

Net Interest Income (NII) grew 16% YoY to ₹2,341 crore, while Net Interest Margin (NIM) improved by 25 basis points QoQ to 5.7%, aided by a decline in cost of funds and improved deposit mix.

Robust Growth in Loans and Deposits

The bank’s gross loan portfolio rose 19.3% YoY to nearly ₹1.30 lakh crore, significantly outpacing overall banking system credit growth. Loan growth was led by secured retail assets and commercial banking, while unsecured portfolios showed signs of stabilization.

On the liability side, total deposits increased 23.3% YoY to ₹1.38 lakh crore, with CASA ratio remaining stable at around 29%. Cost of funds declined by 22 basis points sequentially to 6.61%, providing further support to margins.

Asset Quality Continues to Improve

Asset quality trends remained stable, with Gross NPA at 2.30%, down slightly on a sequential basis, while Net NPA stood at 0.88%. Slippages declined 13% quarter-on-quarter, and credit cost reduced sharply to 0.78% of average assets, reflecting normalization in unsecured segments and seasonal recovery in secured loans.

Capital and Balance Sheet Strength

AU Small Finance Bank maintained a strong capital position, with Capital Adequacy Ratio (CRAR) at 19.0% and Tier-I capital at 17.1%. Book value per share increased 15% YoY to ₹255, while trailing twelve-month EPS stood at ₹31.

Management Outlook

Management highlighted progress toward the bank’s universal banking transition, continued expansion of its distribution network, and increasing use of AI-driven digital platforms to enhance customer engagement and operational efficiency.

With improving profitability, strong balance sheet metrics, and steady growth across key segments, AU Small Finance Bank appears well-positioned for the next phase of expansion.