Earnings call transcript: AU Small Finance Bank posts strong Q2 2026 profit growth

AU Small Finance Bank announced a notable increase in profit for the second quarter of fiscal year 2027 (Q2 FY27), with profit after tax surging 53% year-on-year to INR 858 crores. Return on assets improved to 1.7%, while return on equity rose to 16.1%. The bank reported a 29% growth in deposits and a 25% growth in loans compared to the previous year.

Net interest margin, however, declined by 9 basis points to 5.8%. The bank's stock experienced a 2.2% drop to $932.9 from the previous close of $953.9. Profit after tax grew by 53% year-on-year, signifying strong earnings momentum. Deposits expanded by 29% and loans grew by 25%, both outpacing the banking system's growth. Net interest margin weakened sequentially due to higher investments in assets and seasonal factors.

Asset quality improved, with gross non-performing assets dropping to 1.99%. The bank continued to invest in branches, technology, and AI while expanding its franchise. Q2 FY27 was another quarter of resilient performance despite a tough macroeconomic environment, including higher policy rates and geopolitical uncertainty.