Q2 2025 AU Small Finance Bank Ltd Earnings Call Transcript
Key Points
- AU Small Finance Bank Ltd (NSE:AUBANK) reported strong growth in deposits, crossing the milestone of INR1.5 lakh crores, with a quarter-to-quarter growth of 12.7%.
- The bank's CASA deposits grew by 11% quarter-to-quarter, maintaining a healthy CASA ratio of 32%.
- Profitability improved with pre-provision operating profit increasing by 19% quarter-to-quarter and profit after tax rising by 14%.
- The bank's cost-to-income ratio improved from 61% in Q1 to 57% in Q2, driven by higher efficiency and cost control.
- AU Small Finance Bank Ltd (NSE:AUBANK) is leveraging its distribution network and increasing product coverage, with plans to expand its wheels and MBL offerings to more touchpoints by the end of the financial year.
- The operating environment remains challenging due to high inflation, election cycles, and adverse weather conditions, impacting the informal customer segments.
- Credit costs in unsecured segments, particularly in microfinance and credit cards, are elevated and expected to remain high in the second half of the year.
- The bank's gross NPA in secured assets saw an uptick due to seasonality and weather-induced challenges.
- The microfinance segment, which constitutes 7% of the bank's book, is experiencing asset quality issues due to industry-wide customer overleveraging.
- The bank's LCR ratio is at 112%, which may need improvement in light of potential regulatory changes.
Ladies and gentlemen, good day, and welcome to the AU Small Finance Bank Q2 FY25 Earnings Conference Call. (Operator Instructions) Please note that this conference is being recorded.
I now hand the conference over to Mr. Prince Tiwari, Head of Investor Relations. Thank you, and over to you, sir.
Thank you, Sejal, and good evening, everyone. Welcome to AU Bank's earnings call for the second quarter of FY25, and we thank you all for joining the call today. The format for today's call will be very similar to what we have had in the last few quarters, where we'll start with the opening remarks from the management for the first 10 to 15 minutes. And then we'll follow that up with a Q&A session with the participating analysts and investors for the next 40 to 45 minutes.
To start the call, we'll have our MD and CEO, Sri Sanjay Agarwal, share his thoughts on the overall performance of the bank for the quarter as well as the strategic outlook for the bank. Besides Sanjay, we also have
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