Q2 2026 AU Small Finance Bank Ltd Earnings Call Transcript
Key Points
- AU Small Finance Bank Ltd (NSE:AUBANK) received in-principle approval from the Reserve Bank of India to transition to a universal bank, which is expected to enhance trust and brand acceptance.
- The bank's deposit book grew by 21% year-on-year, significantly outpacing the system growth rate.
- Loan portfolio, excluding unsecured businesses, grew by 22% year-on-year, indicating strong performance in core secured segments.
- Net interest margins improved to 5.5% from 5.4% in the previous quarter, driven by a decline in the cost of funds.
- The bank is actively participating in government credit guarantee schemes and interest subsidy programs, which are expected to lower risk exposure and borrowing costs for targeted groups.
- Credit growth in the banking system has slowed to 10% from 15% in FY24, indicating a challenging macroeconomic environment.
- The unsecured loan portfolio, including microfinance and credit cards, has been undergoing a reset cycle, impacting overall growth.
- Operating expenses increased by 11% year-on-year and 7% quarter-on-quarter due to growth in disbursements and investment in manpower.
- The bank's credit cost remains a concern, with a significant portion coming from microfinance and credit card segments.
- There is uncertainty regarding the impact of the transition to a universal bank on operational expenses and capital requirements.
Ladies and gentlemen, good day and welcome to the AU Small Finance Bank Q2 FY26 earnings conference call.
As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing start then 0 on the touchtone phone. I now hand the conference over to Mr. Prince Dewari, head of investor relations.
Thank you and over to you, sir.
Thank you Rupija and good evening everyone and welcome to A&I call for the second quarter of financial year 2025 26.
Thank you all for joining the call this evening on today.
This call from management side. We have our founder, MD and CEO Mr. Sanjay Rewal, executive director and deputy CEO Mr. Owal, interim CFO Mr. Gavjan, Chief Trade Officer Mr. Vivepati, and the IR team.
We start today's call 2025 minutes opening remarks by Mr. Gourav Jan
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