AU Small Finance Bank Q1 FY27 net profit falls 4.3% sequentially to ₹796 crore
Synopsis
AU Small Finance Bank's Q1 FY27 numbers tell two stories at once: a 37% year-on-year profit surge powered by NII growth, and a 4.3% sequential dip that, combined with rising NPA ratios and sustained share underperformance against the Sensex, raises questions about near-term asset quality pressure in its loan book.
Key Takeaways
AU Small Finance Bank reported Q1 FY27 net profit of ₹795.95 crore — down 4.3% sequentially but up 37% year-on-year.
Net interest income (NII) rose 31.9% year-on-year to ₹2,696 crore in April–June 2025 .
Operating profit grew 9.4% YoY to ₹1,435 crore ; provisions fell 30.4% YoY to ₹371 crore .
GNPA edged up to 2.10% from 2.03% quarter-on-quarter; NNPA rose to 0.76% from 0.74% .
The stock closed at ₹1,002.25 on the NSE , underperforming the BSE Sensex over the past one and two weeks.
AU Small Finance Bank reported a 4.3% sequential decline in net profit for the first quarter (Q1) of FY27, with earnings slipping to ₹795.95 crore from ₹831.87 crore in the preceding January–March 2025 quarter, according to the bank's regulatory filing. However, on a year-on-year basis, the Jaipur-headquartered lender posted a robust 37% jump in net profit, up from ₹581 crore in Q1 FY26.
Net Interest Income and Operating Performance
Net interest income (NII) — the gap between interest earned and interest paid — surged 31.9% year-on-year to ₹2,696 crore in the April–June 2025 quarter, compared with ₹2,044 crore a year earlier. This strong NII growth underpinned the bank's annual profit recovery even as sequential momentum softened.
Operating profit grew 9.4% year-on-year to ₹1,435 crore, up from ₹1,312 crore in Q1 FY26. Notably, provisions fell sharply — down 30.4% year-on-year to ₹371 crore from ₹533 crore in the corresponding quarter of the previous fiscal, reflecting meaningfully lower credit costs across the book.
Asset Quality: A Modest Slip
Asset quality showed a marginal deterioration quarter-on-quarter. Gross non-performing assets (GNPA) edged up to 2.10% as of 30 June 2025, from 2.03% at the end of the March 2025 quarter. Net non-performing assets (NNPA) similarly inched higher to 0.76% from 0.74% sequentially. While the movement is modest in absolute terms, it warrants monitoring given the broader stress in small-finance-bank loan books across the sector.
Stock Performance and Market Context
Shares of AU Small Finance Bank closed at ₹1,002.25 on the National Stock Exchange (NSE) on Friday, 25 July 2025. The stock has touched a 52-week high of ₹1,090.40 and a 52-week low of ₹682.50, indicating significant range-bound volatility over the past year.
The bank's shares have underperformed the broader market in recent weeks. The stock declined 2.68% over the past week, 6.54% over the past two weeks, 6.11% over one month, and 5.95% over the past three months. By comparison, the BSE Sensex fell 1.95% over two weeks and 1.21% over one month — underscoring that AU Small Finance Bank's underperformance relative to the benchmark has been pronounced.
What to Watch
The sequential profit dip, combined with a slight uptick in bad loans and sustained share price underperformance, will keep investor attention on the bank's loan book quality and deposit mobilisation in the coming quarters. Management commentary on credit costs and NIM trajectory in Q2 FY27 will be closely tracked by analysts.
Point of View
A marginal but directional rise in both GNPA and NNPA, and sustained share underperformance against the Sensex suggest the market is already pricing in near-term asset quality concern. The sharp drop in provisions — down 30.4% year-on-year — flattered the bottom line this quarter; if credit costs normalise upward in Q2, the profit trajectory could face fresh pressure. Small finance banks as a category have been navigating elevated stress in unsecured and microfinance segments, and AU's NPA movement, however modest, fits that broader pattern. Investors would do well to look past the YoY optics and focus on whether NIM compression and loan book quality hold through the second half of FY27.
NationPress
25 Jul 2026
Frequently Asked Questions
What was AU Small Finance Bank's net profit in Q1 FY27?
AU Small Finance Bank reported a net profit of ₹795.95 crore in Q1 FY27 (April–June 2025), a 4.3% sequential decline from ₹831.87 crore in Q4 FY26, though up 37% year-on-year from ₹581 crore in Q1 FY26.
Why did AU Small Finance Bank's profit fall sequentially?
The sequential dip reflects a softening in quarter-on-quarter momentum even as annual growth remained strong. A marginal rise in gross and net NPA ratios and the base effect from a strong March quarter contributed to the sequential decline.
How did AU Small Finance Bank's NII perform in Q1 FY27?
Net interest income rose 31.9% year-on-year to ₹2,696 crore in Q1 FY27, up from ₹2,044 crore in Q1 FY26. This was the primary driver of the bank's strong annual profit growth.
What is AU Small Finance Bank's current asset quality?
As of 30 June 2025, gross NPA stood at 2.10% and net NPA at 0.76%, both marginally higher than the 2.03% and 0.74% recorded at the end of March 2025. Provisions fell 30.4% year-on-year to ₹371 crore.
How has AU Small Finance Bank's share price performed recently?
The stock closed at ₹1,002.25 on the NSE on 25 July 2025, underperforming the BSE Sensex over the past week, two weeks, one month, and three months. Its 52-week range is ₹682.50 to ₹1,090.40.
