In a significant financial milestone, AU Small Finance Bank Ltd announced a robust 37 percent year-on-year rise in net profit, touching Rs 2,106 crore for FY25, up from Rs 1,534.72 crore in FY24. The announcement was made on April 22 through a regulatory filing, highlighting not only improved earnings but also operational benefits flowing in from its recent merger with Fincare Small Finance Bank.

Strong Q4 Performance Underscores Bank’s Growth Momentum

In the fourth quarter of FY25, the bank’s net profit rose to Rs 503.7 crore, marking a 36 percent increase from Rs 370.74 crore in Q4 FY24. The strong quarterly performance was underpinned by substantial growth in total and interest income.

• Total income surged to Rs 5,031.27 crore, compared to Rs 3,370.51 crore in the same period last year.

• Interest income climbed to Rs 4,270.60 crore, representing an impressive 51 percent year-over-year increase.

These numbers reflect AU’s continued push for expansion and improved lending operations.

Merger with Fincare Small Finance Bank: A Strategic Leap

One of the major contributors to this year’s strong performance was the successful merger with Fincare Small Finance Bank, which became effective from April 1, 2024.

• The merger led to issuance of 7.35 crore new equity shares, taking AU’s total paid-up capital to Rs 744.53 crore.

• Post-merger, AU's Capital Adequacy Ratio (CAR) rose to 20.06 percent, from 18.01 percent in the previous quarter, providing greater financial stability.

• The merger has expanded AU’s geographical footprint, diversified its loan portfolio, and widened its customer access and asset base, aligning with the bank’s long-term growth strategy.

The regulatory filing also noted that the combined institution is better positioned to drive operational efficiencies and scale its services more effectively.

Dividend and Shareholder Returns

In line with its shareholder reward policy, the Board of Directors recommended a dividend of Rs 1 per equity share, representing 10 percent of the face value, subject to approval in the upcoming Annual General Meeting (AGM). This reaffirms the bank’s commitment to sustained value creation for investors.

Asset Quality and Stability Post-Merger

Despite the ongoing transformation due to the merger, AU Small Finance Bank has maintained a stable asset quality:

• Gross NPA (Non-Performing Assets) stood at 2.28 percent

• Net NPA remained low at 0.74 percent

The Return on Assets (ROA) for the full year was reported at 1.53 percent, indicating efficient use of the bank’s expanding asset base.

Balance Sheet Expansion

The bank’s total assets soared to Rs 1,57,84,567 lakh in FY25, compared to Rs 1,09,42,567 lakh in FY24, underscoring a 44% jump in asset size.

Such asset growth reflects increasing credit demand, deposit mobilisation, and organic expansion post-merger.

Outlook: Scaling New Heights

With the integration of Fincare’s systems and processes, AU Small Finance Bank is poised to operate on a much larger scale in FY26 and beyond. The synergies from the merger are expected to strengthen operational efficiency, enhance customer acquisition, and deliver stronger profitability going forward.

The focus will remain on:

• Leveraging its enhanced capital base for strategic lending

• Strengthening digital banking platforms

• Improving loan portfolio quality and customer services

The successful performance in FY25 is also likely to boost investor confidence, and could positively impact AU Small Finance Bank’s share price trajectory.

Conclusion

AU Small Finance Bank’s performance in FY25 highlights the effectiveness of its strategic merger with Fincare Small Finance Bank and its consistent approach to value-driven banking. With robust financials, prudent asset management, and improved capital adequacy, the bank is charting a promising course for the future.

Stakeholders, including investors, regulators, and customers, will be closely watching how the newly expanded entity leverages its scale and synergy benefits in the coming fiscal year.

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