AU Small Finance Bank Limited — Q4 FY26
AU Small Finance Bank delivered a strong Q4 FY26 with PAT of ₹832 crore (+65% YoY) and ROA of 1.8%, driven by margin expansion (+24bps QoQ to 5.96%), lower credit costs (0.6%),...
bullish
high
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.
25%Questions answered7Evaded / deflected12Questions audited
Evasive
Medium priority
Details on INR 21 crore contingency provision for specific accounts.
Asked by Renish Bhuva, ICICI Securities
Management did not provide segment or exposure details, calling it normal risk assessment.
no specific details on accountsno aggregate exposure givendismissed as normal
Read the exchange
Question
One, on this contingency provision creation of, what, INR 21 crore during Q4. So you have mentioned that, we have built this towards some specific accounts. Can you share some more details, around these accounts, like, you know, it pertains to, which segment, we have seen real estate, commercial banking? Or, maybe what is the aggregate exposure at bank level?
Vivek Tripathi, Executive Director and Chief Credit Officer
These are normal, you know, these are not some high-value specific cases. These are normal business banking working capital cases. We assess the risk, you know, assuming that, the risk assessment, whether what amount is covered through our security and other thing, through recommendation and is provided. There is nothing specific to it, right?
Evasive
High priority
Reason for hiking deposit rates ahead of industry.
Asked by Renish Bhuva, ICICI Securities
Management avoided confirming deposit challenges, instead discussed general liability strategy.
no direct answer on challengesreframed as multi-variable strategyno specific reason given
Read the exchange
Question
My second question is on the, you know, the action behind hiking interest rate in savings account and TD way ahead of the industry. Are we experiencing some challenges in raising incremental deposits or it is that we anticipate some better growth going ahead and to maintain CD ratio, maybe we are hiking rates to remain competitive?
Sanjay Agarwal, Founder, MD, and CEO
In terms of liability, you know, we are not focusing on one data point or, you know, one way of building it up, right? It is a combination of 3-4 variables like, you know, one is how much you want to raise the cost of money, you know, how you want to play your CASA, how you want to play your retail versus wholesale, you know, the overall CD ratio.
Partial answer
High priority
ROA at 1.8% - focus on driving up or sustaining?
Asked by Kunal Shah, Citigroup
Management gave directional levers but no quantified target for ROA.
no specific target givenattributed to seasonality
Read the exchange
Question
Firstly, with respect to ROA, we are almost at 1.8% now on exit level. What would be the focus? Maybe would we still try to drive it up further or sustenance of that will be critical? What would be the levers available to drive it?
Gaurav Jain, CFO
Kunal, obviously, you know, we know that Q4 is always seasonally strong, right? That 1.8% also, you know, reflects that strong seasonality. You know, our goal would be to maintain this ROA or achieve this ROA on a full year basis for next year.
Evasive
Medium priority
Quantify IT refund and recoveries impact on margins.
Asked by Kunal Shah, Citigroup
Management refused to quantify the IT refund or recoveries impact.
no quantificationdismissed as immaterial
Read the exchange
Question
But there is element of IT refund as well as some recoveries which is indicated in that paragraph. How much- If you can quantify that because there would be some pressure on yields as well.
Gaurav Jain, CFO
I think on this side, right, there was some IT refund. I would not say that was material to the overall movement. It helped by a tiny bit, but nothing specific to call out there.
Evasive
High priority
How will tech investments translate into cost ratios?
Asked by Nitin Aggarwal, Motilal Oswal
Management gave no quantified cost ratio target, citing early stage.
no cost ratio targetdeferred to future
Read the exchange
Question
How do you see this translating into business volumes, and what kind of cost ratios will you now target over the next 2, 3 years as the bank transitions to universal bank?
Sanjay Agarwal, Founder, MD, and CEO
I'm not able to imagine that what kind of cost reduction that AI will do us because it's a very early stage. ... To get to some number is difficult, Nitin, in this call. Maybe down the line one year you will be able to figure out that, you know, how much it will help us.
Answered
High priority
Should we benchmark credit cost at Q4 level going forward?
Asked by Nitin Aggarwal, Motilal Oswal
Management gave a specific credit cost guidance of around 90 bps.
Read the exchange
Question
Should we benchmark our estimates around credit cost versus this quarter number? Because if I look back, we used to like have much lower credit cost versus what we have seen in this year, and now we are approaching closer to that number in Q4 now.
Sanjay Agarwal, Founder, MD, and CEO
I would advise anybody that you should actually build this quarter credit cost as an overall cost for next year, you know. If you ask me, you should build it around 90 basis points or maybe in that range so that, you know, it allows franchise to have some kind of risk-taking capability.
Declined
High priority
Impact of ECL norms on steady-state credit cost.
Asked by Jayant Kharote, Axis Capital
Management declined to provide any guidance on ECL impact.
refused to commentdeferred
Read the exchange
Question
We also have RBI ECL norms coming through as we speak. Any impact on steady-state credit cost for us given the entire book experience in recent years since we are growing that book again. In regards to the 90 basis points guidance, how should that look with the new ECL guidelines?
Sanjay Agarwal, Founder, MD, and CEO
ECL guideline has just come in, right? We haven't- I'm so sorry to give any guidance around it. You know, you have to give us some time.
Partial answer
Medium priority
Geographical liability expansion strategy.
Asked by Jayant Kharote, Axis Capital
Management gave broad strategy but no specific geographic liability targets.
no specific geographic targetsgeneral strategy given
Read the exchange
Question
Next two years as we transition to a universal bank, I do understand on the asset side you have some focus areas in the south. If you can help us understand what would be your strategy on liability geographically.
Sanjay Agarwal, Founder, MD, and CEO
I think if you ask me the most important strategy which we work on daily basis or maybe in execution or any meeting or any review is around liability franchise. ... We want to become a pan-India franchise. We want to open around 80-100 branches every year.
Evasive
Medium priority
How to strengthen PCR and contingency provisions?
Asked by Pritesh Bumb, DAM Capital Advisors
Management did not provide a target or plan for strengthening PCR.
no specific PCR targetdeferred to ECL guidelines
Read the exchange
Question
As we have now come out from the asset quality cycle, how are we looking to strengthen the residual asset quality metrics like PCR, contingency provisions and ACL, as we go along?
Vivek Tripathi, Executive Director and Chief Credit Officer
PCR is not a defined number. It goes by the provisioning policy. There is no change in the provisioning policy, right? The ECL guideline as it would come and we need to follow from first, you know, April 2027. Obviously, some of it, you know, will have a impact on stage one, stage two, but then your accelerated provisioning at stage three might get released.
Partial answer
High priority
How to think about margins going into next year?
Asked by Param Subramanian, Investec
Management gave directional outlook but no specific margin forecast.
no quantified margin guidancedirectional only
Read the exchange
Question
I just wanted to understand again the, how we are, how we should think about, margins going into next year. So I heard you call out that, you know, there is a day count benefit this quarter and reversals as well, benefit of lower reversals.
Gaurav Jain, CFO
I think on this specific thing margins right I'll repeat what I said earlier right? On cost of funds, I think we've said that you know this quarter cost of funds may have bottomed out with the rate increases we have taken right? ... To the extent that you know Q4 is strong seasonally and Q1 is weaker you won't see this benefit in the next quarter.
Deflected
Medium priority
Loan mix growth from southern geography and segments.
Asked by Akshay Jain, Autonomous
Management deflected the question, saying it's not relevant to focus on specific geography.
dismissed question as irrelevantredirected to overall growth
Read the exchange
Question
How should we look at growth, AUM growth from the southern geography? You know, what proportion of your incremental growth should come from south in, say, 3-5 years, and which segments will be driving this growth?
Sanjay Agarwal, Founder, MD, and CEO
You know, I would say that it's too operational now. You know, we have become one bank and it's not about southern market or north market, you know. ... I think it's not relevant because, you want to judge our overall growth rather than some market growth, you know.
Partial answer
Medium priority
Long-term target for cost of funds relative to repo rate.
Asked by Ashlesh Sonje, Kotak Securities
Management gave a long-term aspirational target but no timeline or commitment.
no timeline givenaspirational target
Read the exchange
Question
More through the cycle, do you have an internal target of where this cost of funds should be, let's say, relative to the banks with the lowest cost of funds, after you get the universal bank license?
Sanjay Agarwal, Founder, MD, and CEO
I think the long-term target or the long term, I would say, the way we are pushing internally that our cost of money should be around the repo rate prevalent at that time. ... That's a long-term dream and target, you know, but can't comment that when we'll we reach there.