AU Small Finance Bank Limited — Q1 FY26
AU Small Finance Bank reported a 16% YoY PAT growth to INR 581 crore in Q1 FY26, with ROA at 1.5%.
neutral
medium
Financial stats pending filing verification
Claim Ledger
Did management answer the analysts?
Every material analyst question, graded on whether management actually answered it — with the verbatim exchange and quantitative claims checked against filed numbers.
79%Questions answered0Evaded / deflected12Questions audited
Partial answer
High priority
ROA outlook for FY26 and FY27 given NIM and credit cost pressure.
Asked by Renish, ICICI
Management gave FY27 target but avoided FY26 ROA guidance.
no FY26 ROA guidance given
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Question
How do you expect ROA settling in 2026 and 2027 considering pressure on NIM and credit costs in 2026?
Gaurav Jain, President of Finance and Strategy
We haven't guided for an ROA for FY26, and we reiterate our guidance of achieving 1.8% ROA for FY27.
Answered
Medium priority
Stress in UCV and CV vehicle financing segment details.
Asked by Renish, ICICI
Provided specific percentage and explanation of stress.
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Question
Can you please elaborate further? Is it geographically specific or broad based due to weak macros?
Vivek Tripathi, Chief Credit Officer
That used SCV and HCV book is about 6% of total Wheels asset. The trend started last year due to delayed CapEx and heavy rain. We took corrective measures and the book is performing well post that.
Partial answer
High priority
Has secured retail credit cost structurally increased to ~100 bps?
Asked by Suraj Das, Sundaram Mutual Fund
Acknowledged higher credit cost but did not confirm structural shift.
no clear yes/no on new normal
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Question
Would it be fair to assume that probably that 60, 70 basis point credit cost in the secured retail is not possible anymore?
Sanjay Agarwal, MD and CEO
I would strongly advocate that these businesses go through cycles. We should expect a little bit elevated credit cost which may be in the range of 75, 80. Last year we thought 85, 90. In securitial asset you will see improvement maybe next year.
Answered
High priority
What changed post last call to cause stress in MFI and southern mortgage?
Asked by Kunal Shah, Citigroup
Provided specific reasons for stress in both segments.
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Question
What changed post maybe the commentary in the last earnings call? What actually led to that?
Vivek Tripathi, Chief Credit Officer
Collection efficiencies in non-OD in microfinance were trending upward of 98.7% by March. It did not sustain in Q1. On southern mortgage, it was a granular book with differentiated yield at 18.5%. There was a transition of team.
Answered
High priority
Loan growth outlook for FY26 given stress in some segments.
Asked by Ashlesh Sonje, Kotak Securities
Provided clear growth framework and segment targets.
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Question
How do you think about your outlook for loan growth in 2026?
Prince Tiwari, Head of Investor Relations
We look forward to grow anywhere between 2 to 2.5 times of nominal GDP. Heavy lifting will be done by vehicle financing, commercial banking, and gold loans. Those can grow 20% to 25%.
Partial answer
Medium priority
Credit card revolver book NPA potential and restated share.
Asked by Ashlesh Sonje, Kotak Securities
Stated peak but did not quantify potential NPA flow.
no specific NPA estimate given
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Question
Do you have a sense of how much of the overall book or out of this Revolver book can eventually flow into NPAs?
Vivek Tripathi, Chief Credit Officer
In absolute term the credit cost has peaked. It would start coming down from this quarter onward. We know what pool is performing.
Answered
Medium priority
Why is other OpEx down YoY despite franchise growth?
Asked by Param Subramanian, Investec
Provided specific reasons for OpEx decline.
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Question
What explains that? Other operating expenses are down on a YoY basis.
Prince Tiwari, Head of Investor Relations
There was a lot of internal focus around productivity and efficiency gains. We cut down cost expenses, rationalized digital marketing, and credit card issuances slowed down.
Answered
High priority
Is retail secured credit cost increase purely from unsecured?
Asked by Param Subramanian, Investec
Confirmed unsecured as driver and gave peak timing.
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Question
Would it be fair to say this increase in credit cost is purely what we are seeing on the unsecured side?
Sanjay Agarwal, MD and CEO
We were knowing that Q1, Q2 will remain elevated. In absolute amount the credit card cost is already peaked. MFI credit cost will peak in Q2. Everything else remains absolutely in shape.
Partial answer
Medium priority
Medium-term strategy for credit card business given high pain.
Asked by Nitin Aggarwal, Motilal Oswal
Described actions but no specific medium-term target.
no timeline for rebound
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Question
How do you in the medium term look at this business, how quickly will we want to rebound?
Sanjay Agarwal, MD and CEO
Credit card cost is giving more pain than MFI. Leadership change done. We have done correction in acquisition underwriting and collection. Idea is to control losses and come on BP first.
Answered
Medium priority
Credit environment in vehicle financing and growth opportunities.
Asked by Nitin Aggarwal, Motilal Oswal
Provided specific growth number and confidence.
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Question
Can you talk about the credit environment in the vehicle business?
Sanjay Agarwal, MD and CEO
Wheels business is oldest, well-rounded. Environment is tough but growth strategy will help. We grew 26% this quarter. Team confident to achieve target without blowing up asset quality.
Answered
High priority
Does 1.8% ROA for FY27 assume MFI credit cost of 2.5-3%?
Asked by Pritesh Bumb, DAM Capital Advisors
Confirmed assumptions for MFI and credit card.
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Question
When we say our 1.8% ROE for 2027, have we built in a cross-cycle MFI credit cost of 2.5% to 3%?
Sanjay Agarwal, MD and CEO
By next year, entire MFI book will be covered under credit guarantee. Maximum credit cost should not be above 3-3.5%. Credit card business will be in better shape.
Partial answer
Medium priority
Yield pressure in Wheels fixed rate book due to liquidity.
Asked by Bhavik Shah, InCred Capital
Acknowledged pressure but did not quantify impact.
no quantification of yield decline
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Question
Have we seen yields cracking in the Wheels segment in the fixed rate book?
Sanjay Agarwal, MD and CEO
If there is liquidity available and no growth happening, then there would be a pressure on yield. By end of this year, there might be some pressure on yield.