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AU Small Finance Bank stock hits 5% upper circuit after strong Q1 earnings

Shares of AU Small Finance Bank hit upper circuit of 5 percent to Rs 794.55 in the early trade on Friday after the bank reported a strong set of numbers for the first quarter of fiscal 2021.

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By Ankit Gohel  July 24, 2020, 10:36:04 AM IST (Published)

AU Small Finance Bank stock hits 5% upper circuit after strong Q1 earnings
Shares of AU Small Finance Bank hit an upper circuit of 5 percent to Rs 794.55 in the early trade on Friday after the lender reported a strong set of numbers for the first quarter of fiscal 2021. The stock has risen over 116 percent from its 52-week low of Rs 366.20 apiece hit on May 27, 2020.


The bank reported a 5.5 percent rise in net profit in Q1FY21 to Rs 200.8 crore from Rs 190.3 crore in Q1FY20. Its profit, excluding profit from the sale of equity shares of Avas Financiers Ltd, rose by 48 percent to Rs 177 crore as against Rs 119 crore.

Net Interest Income (NII) during the quarter increased 30.4 percent to Rs 515.8 crore from Rs 395.6 crore, YoY. However, the net interest margin declined to 5 percent versus 5.5 percent, QoQ.

The asset quality of the bank improved as gross non-performing assets (NPA) declined 2.3 percent to Rs 447.1 crore from 457.8 crore while net NPA fell 24.8 percent to Rs 163.2 crore from Rs 217.3 crore, QoQ.

The Gross NPA ratio remained stable at 1.69 percent while the net NPA ratio fell by 19 bps to 0.62 percent, sequentially.

AUM growth was 17 percent YoY and retail AUM remained dominant at 84 percent, the bank said.

The bank’s disbursement declined by 70 percent to Rs 1,181 crore for the quarter. The disbursement includes non-fund based credit facilities sanctioned and Rs 246 crore disbursed under Targeted Long Term Repo Operations (TLTRO)—out of a total limit of Rs 300 crore.

"Complete moratorium has been availed by 11 percent of our borrowers by value on gross advances as on June 30, 2020," the bank said.

During the quarter, the bank made provisions of Rs 181 crore including the additional provision of Rs 140 crore for the potential impact of COVID-19 in addition to Rs 138 crore COVID-19 provision created in last quarter (other than standard and NPA Provisions).

"Bank continues to perform well enough on all metrics such as deposit growth, extra liquidity buffers, assets quality, digital banking, inclusive banking, customer engagements and employee safety... In Q1FY21, our PAT grew by 48 percent with the continuous declining trend in the cost of funds," Sanjay Agarwal, MD and CEO, AU Small Finance Bank, said.

Being in a very uncertain environment, the bank made additional provisions to create an extra buffer to build resilience, financial stability and to strengthen its balance sheet, he said.

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