AU Small Finance Bank Q2 Results, October 24, 2026: Profit Jumps 53% to ₹858 Crore

AU Small Finance Bank Q2 results came out on Saturday, October 24, 2026, and the headline is hard to miss: net profit for the July-September quarter rose 53% year on year to ₹858 crore, against ₹561 crore in the same quarter last year. The Jaipur-based lender’s press release filed with NSE pairs that with 29% deposit growth and 25% loan growth. Growth on both sides of the balance sheet, with margins wider too, is what makes this quarter interesting.

AU Small Finance Bank Q2 results: the key numbers

Net interest income, what the bank earns on loans minus what it pays on deposits and borrowings, grew 32% to ₹2,820 crore from ₹2,144 crore. Net interest margin widened 33 basis points to 5.8% from 5.5%. The bank says the cost of funds fell 43 basis points to 6.41%, while gross advance yields slipped 27 basis points because of a change in the loan mix. So the margin gain came from the liability side, not from charging borrowers more.

Core other income, mostly fees from credit cards and transaction banking, rose 16% to ₹736 crore. Operating expenses grew 26% to ₹2,077 crore. Core pre-provision operating profit rose 31% to ₹1,480 crore. Net provisions fell 25% to ₹359 crore from ₹481 crore, and that drop is a big part of why profit grew faster than operating profit.

• Return ratios: annualised return on assets of 1.7% and return on equity of 16.1%, up from 1.4% and 12.4% a year earlier.
• Half-year: H1 FY27 profit rose 45% to ₹1,654 crore from ₹1,142 crore.
• Credit cost: 0.8% of average assets (including guarantee premium), down from 1.2%.

We matched the profit numbers against the board meeting outcome and financial results: the statement shows quarterly profit of ₹85,768.99 lakh (about ₹858 crore), ₹56,087.03 lakh a year earlier, and ₹1,65,364.28 lakh for the half year.

Deposits and loans

Total deposits reached ₹1,70,460 crore as of September 30, 2026, up 28.6% from a year earlier and 8.1% from June. The bank says that is about 1.6 times the growth of the banking system. CASA deposits, the cheaper current and savings accounts, grew 29.1% to ₹50,289 crore, which puts the CASA ratio at 29.5%. Current account balances rose 55% to ₹11,693 crore and savings balances rose 23% to ₹38,595 crore.

The gross loan portfolio stood at ₹1,53,769 crore, up 25.1% year on year and 6.6% over the quarter. Secured retail and commercial loans grew 25.9%, and the unsecured book of microfinance, credit cards and personal loans grew 22.9%. The vehicle finance business crossed ₹50,000 crore of loans in August and now makes up about a third of the portfolio.

Asset quality held up

Gross NPA fell to 1.99% from 2.41% a year back, and net NPA improved to 0.81% from 0.88%. Provision coverage, including technical write-offs, is 83%. Collection efficiency on microfinance loans that were not overdue was 99.6%, against 99.5% in the June quarter. For a lender with an unsecured book, that is the line we would read first.

What it means

A few things stand out. ICRA moved the bank’s long-term rating outlook to Positive from Stable while keeping the AA rating. The bank already has in-principle RBI approval to become a universal bank, and this quarter’s deposit growth helps make that case. On the other side, costs are rising at 26%, close to the pace of the balance sheet, and lower provisions did a lot of the work in this profit jump. Watch whether margins stay near 5.8% if deposit rates stop falling.

Kotak Mahindra Bank and IDFC First Bank also reported on October 24. You can compare them with our coverage of Kotak Mahindra Bank’s Q2 results and IDFC First Bank’s Q2 results. If you want a step-by-step way to read a bank’s quarter, our guide on how to analyse quarterly results of a company covers it.

Disclaimer: This article is for information and education only and is not investment advice. Please consult a SEBI-registered adviser before making any investment decision.