Financial Services · NSE: AUBANK
AU Small Finance Bank
Q2 FY27 earnings call · Guided by management
Call held 24 Oct 2026 · Read the filing on NSEFiling
- M.Cap
- ₹73,548Cr
- P/E
- 23.3×
- 1Y return
- +11.03%
- From 52W high
- −14.4%
Highlights are read by AI from the company's filing and can contain mistakes. Check the source page linked to each line.
Share price
Results Q2 FY27, as filed · standalone · ₹ Cr
| Q2 FY27 | Q2 FY26 | YoY | Q1 FY27 | QoQ | |
|---|---|---|---|---|---|
| Interest earned | 5,612 | 4,511 | +24.4% | 5,303 | +5.8% |
| Net interest income | 2,820 | 2,144 | +31.5% | 2,696 | +4.6% |
| Operating profit | 1,514 | 1,210 | +25.1% | 1,435 | +5.4% |
| Net profit | 858 | 561 | +52.9% | 796 | +7.8% |
| EPS (₹) | 11.30 | 7.48 | +51.1% | 10.51 | +7.5% |
From the company's own results filing on NSE. Net profit is the owners' share. Growth and the dotted lines are worked out from the filed figures.
Guidance
Cost-to-assets ratio expected to improve YoY for the full year; 3.9% in Q2
Gaurav Jain · Chief Financial Officer · p. 5
Cost-to-assets ratio expected to improve YoY for the full year; 3.9% in Q2
“Operating leverage continues to play out on underlying basis, with Cost-to-assets ratio, excluding guarantee premium, improving from 4.0% in Q1 to 3.9% this quarter. We expect cost to assets ratio to improve YoY on a full year basis.”
Credit cost expected within guided range; not expected to reach it
Vivek Tripathi · Executive Director · Q&A · p. 12
Credit cost expected within guided range; not expected to reach it
“So far, till September, everything has been in line and what we anticipate that we would be within our guided range. So we do not anticipate that we will be reaching it (guided credit cost).”
Deposits to grow faster than or in line with loans
Prince Tiwari · Head · Q&A · p. 11
Deposits to grow faster than or in line with loans
“And I think if you recollect, our public guidance has always been that our deposits will continue to grow faster than or in line with our loan growth.”
More figures from the call
“When you look at our cost-to-assets ratio of about 4%, that compares with other mid-sized banks who are operating between, say, 2.5 to 3.5. I feel confident that on a multi-year basis, we should be looking for sequential improvements on this, despite sort of continuing to invest in our in our franchise, right?”
“So, I think 80-90, or maybe 100 bps premium to other banks, we want to be on that strategy only, because we haven't seen any rates coming down because of FCNR deposits, and it was largely on the I would say wholesale deposits where some cut happened.”
“Typically takes about 3 to 4 months, or one full quarter, so full impact will be visible next quarter, but it will start happening from this month onwards.”
“We do not want to grow our housing book much, but there also the growth rate is around 10%-12%.”
In short
- 01Deposits grew 29% YoY and loans grew 25% YoY in Q2.
- 02Profit after tax rose 53% YoY to Rs 858 crore; RoA 1.7%, RoE 16.1%.
- 03Margin fell 9 bps QoQ to 5.8% due to higher investments share and seasonality.
- 04Credit cost guidance is close to 90 bps; H1 credit cost was about 73-74 bps.
- 05Management expects deposit growth of around 25% plus this year.
- 06Mortgage growth targeted in the range of 20% by next year.
- 07Insurance fee income consultation paper will be a headwind to other income.
- 08Repo hike to pass to the 30% floating-rate book over 3 to 4 months.
Segments
Secured and unsecured: Secured assets grew 26% YoY; unsecured grew 23% YoY led by microfinance and personal loans
Gaurav Jain · Chief Financial Officer · p. 4
Secured and unsecured: Secured assets grew 26% YoY; unsecured grew 23% YoY led by microfinance and personal loans
“Secured assets, which remain the foundation of our lending franchise, grew by 26% YoY and 5% QoQ. Unsecured businesses grew 23% YoY and 8% QoQ led by microfinance and personal loan.”
Retail secured assets: Retail secured assets are 66% of portfolio and grew 22% YoY
Gaurav Jain · Chief Financial Officer · p. 8
Retail secured assets: Retail secured assets are 66% of portfolio and grew 22% YoY
“Retail secured assets, comprising Wheels, Mortgages and Gold Loan, forms 66% of our portfolio and grew 22% YoY and 5% QoQ.”
Wheels: Wheels book grew 27% YoY to about Rs 51,000 crore on new vehicle demand
Gaurav Jain · Chief Financial Officer · p. 8
Wheels: Wheels book grew 27% YoY to about Rs 51,000 crore on new vehicle demand
“Within Retail, Wheels book crossed the 50,000 crore milestone this quarter and grew 27% YoY and 6% QoQ to reach ~51,000 crore; growth was driven by strong demand in the new vehicle segment as well as increasing disbursement traction across newer geographies.”
Gold Loan: Gold loan book grew 102% YoY and 4% QoQ to about Rs 4,700 crore
Gaurav Jain · Chief Financial Officer · p. 8
Gold Loan: Gold loan book grew 102% YoY and 4% QoQ to about Rs 4,700 crore
“Gold loan business grew 102% YoY and 4% QoQ to ~4,700 crore.”
Mortgages: Mortgages grew 12% YoY, led by MBL where disbursements rose 17%
Gaurav Jain · Chief Financial Officer · p. 8
Mortgages: Mortgages grew 12% YoY, led by MBL where disbursements rose 17%
“Mortgages business, comprising Micro business loans and affordable housing, grew by 12% YoY and 2% QoQ with growth largely being led MBL business where disbursements are up 17% YoY.”
Demand
Wheels: Festive demand strong in Wheels; expected to rise with Diwali
Sanjay Agarwal · Founder · Q&A · p. 26
Wheels: Festive demand strong in Wheels; expected to rise with Diwali
“festive demand is strong there, and it will only go up from here because Diwali is coming up next month and all those stuff.”
Margins and costs
Net interest income up 32% YoY; margins up 33 bps YoY
Gaurav Jain · Chief Financial Officer · p. 5
Net interest income up 32% YoY; margins up 33 bps YoY
“Net Interest Income increased by 32% YoY on the back of strong growth in loan portfolio and 33 bps YoY expansion in margins.”
Margin fell 9 bps QoQ to 5.8% on higher investments share and seasonality
Gaurav Jain · Chief Financial Officer · p. 5
Margin fell 9 bps QoQ to 5.8% on higher investments share and seasonality
“Sequentially, margin declined by 9 bps to 5.8% driven by higher share of investments to total assets and seasonality.”
Operating expenses up 26% YoY on volumes and investment in distribution, brand, tech
Gaurav Jain · Chief Financial Officer · p. 5
Operating expenses up 26% YoY on volumes and investment in distribution, brand, tech
“Operating expenses increased by 26% YoY driven by growth in disbursement volumes and continued investments in distribution, brand and technology.”
Brand spending stepped up, including Kaun Banega Crorepati tie-up
Gaurav Jain · Chief Financial Officer · p. 6
Brand spending stepped up, including Kaun Banega Crorepati tie-up
“We have also stepped up our brand investments across television, print and digital media with association with Kaun Banega Crorepati being a prominent investment.”
Deposit franchise expected to narrow cost of funds gap vs mid-sized peers
Gaurav Jain · Chief Financial Officer · Q&A · p. 15
Deposit franchise expected to narrow cost of funds gap vs mid-sized peers
“So my deposit franchise will improve, which should help me lower the cost of funds differential versus other peer mid-sized banks over a medium-term outlook.”
Debt and working capital
ICRA raised rating outlook to Positive from Stable; AA rating affirmed
Gaurav Jain · Chief Financial Officer · p. 6
ICRA raised rating outlook to Positive from Stable; AA rating affirmed
“In terms of our credit rating, on 1st October, ICRA Ratings upgraded our credit rating outlook to Positive from Stable, while re-affirming our long-term rating at AA.”
Peak retail deposit rate tenure extended from 18 to 36 months
Prince Tiwari · Head · Q&A · p. 20
Peak retail deposit rate tenure extended from 18 to 36 months
“we had elongated our deposit rate retail deposit tenure, the peak rate from 18 months to 36 months.”
Acquisitions and new business
Capital Markets and Transaction Banking: SEBI approval received for UPI sponsorship services under ASBA for IPOs
Gaurav Jain · Chief Financial Officer · p. 8
Capital Markets and Transaction Banking: SEBI approval received for UPI sponsorship services under ASBA for IPOs
“During the quarter, Bank also received SEBI approval for providing UPI Sponsorship Services under the ASBA framework for IPOs and Public Issues.”
Management
Anil Agarwal joins to lead Commercial & Institutional Banking; Amol Padhye is CRO
Gaurav Jain · Chief Financial Officer · p. 6
Anil Agarwal joins to lead Commercial & Institutional Banking; Amol Padhye is CRO
“We also strengthened our senior leadership team, with Mr. Anil Agarwal joining as Senior Executive Group Head, to lead our Commercial & Institutional Banking business and Mr. Amol Padhye formally assuming the role of Chief Risk Officer.”
One-offs
PCR fell after write-offs from aligning write-off policies across books
Vivek Tripathi · Executive Director · Q&A · p. 27
PCR fell after write-offs from aligning write-off policies across books
“The PCR had come down because we had written off some of the book which the alignment, because there was an unsecured book, there was a two-wheeler book.”
Risks
Slippage ratio 2.6% vs 3.3% a year ago; secured slippages stable
Gaurav Jain · Chief Financial Officer · p. 5
Slippage ratio 2.6% vs 3.3% a year ago; secured slippages stable
“Slippage ratio improved on a YoY basis to 2.6% vs 3.3% a year ago supported by improvement in unsecured businesses, while slippages in the secured assets remained stable.”
GNPA at 1.99%, down 42 bps YoY; credit cost 0.8%, down 45 bps YoY
Gaurav Jain · Chief Financial Officer · p. 5
GNPA at 1.99%, down 42 bps YoY; credit cost 0.8%, down 45 bps YoY
“GNPA ratio declined by 42bps YoY to 1.99% and Credit cost, including guarantee premium, declined by 45 bps YoY to 0.8%”
Drought and high oil prices may hit some regions; no stress seen in data yet
Sanjay Agarwal · Founder · Q&A · p. 12
Drought and high oil prices may hit some regions; no stress seen in data yet
“Largely, some of the districts or states might be facing challenges due to drought or high oil prices, but the data has not shown any kind of stress till now.”
Any stress expected to show in Q3; no surprises expected in Q4
Sanjay Agarwal · Founder · Q&A · p. 12
Any stress expected to show in Q3; no surprises expected in Q4
“Let's see how quarter three behaves because whatever will be there will come in the quarter three. I do not expect any surprises in quarter four, to be honest.”
Tractor: Q2 slippages affected by half-yearly tractor billing cycle
Vivek Tripathi · Executive Director · Q&A · p. 13
Tractor: Q2 slippages affected by half-yearly tractor billing cycle
“This quarter, you had tractor billing, and tractor billing will have a little bit of impact on your overall slippages, right?”
Other
Deposits grew 29% YoY and 8% QoQ vs system growth of 18%
Gaurav Jain · Chief Financial Officer · p. 4
Deposits grew 29% YoY and 8% QoQ vs system growth of 18%
“Our deposits grew strongly by 29% YoY and 8% QoQ (vs banking system growth of 18% yoY).”
About US$230 million of FCNR deposits raised gross in Q2
Gaurav Jain · Chief Financial Officer · p. 4
About US$230 million of FCNR deposits raised gross in Q2
“We garnered around US$230 million of FCNR deposits on a gross basis in Q2.”
CASA grew 29% YoY; CASA ratio up 72 bps QoQ to 29.5%
Gaurav Jain · Chief Financial Officer · p. 4
CASA grew 29% YoY; CASA ratio up 72 bps QoQ to 29.5%
“CASA deposits continued to see strong growth at 29% YoY and 11% QoQ with CASA ratio sequentially improving 72bps to 29.5% from 28.8% in Q1”
Loan portfolio grew 25% YoY and 7% QoQ vs sector credit growth of 19%
Gaurav Jain · Chief Financial Officer · p. 4
Loan portfolio grew 25% YoY and 7% QoQ vs sector credit growth of 19%
“Loan portfolio grew 25% YoY and 7% QoQ, against banking sector credit growth of 19%.”
Disbursements up 33% YoY in the quarter
Gaurav Jain · Chief Financial Officer · p. 5
Disbursements up 33% YoY in the quarter
“Disbursement for the quarter was up by 33% YoY”
Sources
- Earnings call transcript, Q2 FY27 Filed 28 Oct 2026 · 29 pages
Management's own statements, quoted from its NSE filings. This page was read by AI and can contain mistakes: check the source pages before relying on any figure. No forecast or opinion of ours. Not investment advice.