AU Small Finance Bank Limited — Q3 FY26
AU Small Finance Bank delivered a strong Q3 FY26 with PAT of ₹668 crore (excluding one-time provision of ₹20 crore, PAT was ₹682 crore, up 29% YoY).
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.
95%Questions answered0Evaded / deflected11Questions audited
Answered
High priority
Margins moving parts, funding mix, credit cost outlook
Asked by Akshay Jain, Autonomous
Management provided detailed breakdown of margin drivers, funding mix stability, and credit cost seasonality with specific numbers.
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Question
So my first question is on margins. So, can you explain the different moving parts on your margins? ... My second question is on funding mix. ... And lastly, on credit costs.
Gaurav Jain (Interim CFO) and Vivek Tripathi (Executive Director and Chief Credit Officer)
So there are three broad parts. The first is the improvement in cost of funds... The second is the benefit from CRR cut. And the third is your lower surplus liquidity... On the funding mix side... stable deposit ratio... has largely remained stable around 80%... On the credit cost, for secured retail assets, seasonally, we always have this improvement in H2.
Answered
High priority
Unsecured loan mix outlook and cost-income ratio trajectory
Asked by Nitin Aggarwal, Motilal Oswal
Management gave clear directional guidance on unsecured mix and cost-income ratio with specific targets.
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Question
One is on the mix of unsecured loans now, how should we look at that... And the other question is around cost. ... how should we look at the cost-income ratio now?
Sanjay Agarwal (Founder, MD, CEO)
We are seeing green shoots in MFI business... Credit card, I think we want to take one more year to really stabilize it... I think we want to be around the original guidance that it should be below 60%... ideally, we should be in the range of 56%-57% next year too.
Answered
High priority
Loan growth outlook and microbusiness loan ramp-up
Asked by Jayant Kharote, Axis Capital
Management provided specific growth targets for overall loans and MBL, though MFI guidance was deferred.
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Question
First question is on the loan growth outlook for the next one or two years. And within that, specifically microbusiness loans, that piece is still not catching up to the overall book.
Sanjay Agarwal (Founder, MD, CEO)
We want to be around 2.25 to 2.5 times to the nominal GDP... anything around 20%, 22% growth overall, we are targeting... MBL... we will be growing maybe this year around 15-16%. The idea is to be really in the range of 17-18% next year.
Answered
High priority
MFI credit cost sustainability and ROA trajectory
Asked by Kunal Shah, Citigroup
Management explained MFI credit cost drivers and reiterated ROA target of 1.8% with timeline.
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Question
So was there any benefit of recoveries, and it should be managed at this level of 1.3 odd %, or the steady-state MFI credit cost should be relatively higher? ... And secondly, with respect to ROA... how are we looking at the overall ROA trajectory?
Vivek Tripathi (Executive Director and Chief Credit Officer) and Sanjay Agarwal (Founder, MD, CEO)
The large reduction of credit cost happened on account of lower slippages and higher coverage of guarantee... On the overall ROA, I think we have been pretty clear... we do believe that we have the potential to deliver a 1.8% kind of ROA on a very sustainable basis.
Answered
Medium priority
NIM trajectory and product-level profitability
Asked by Speaker 16 (Vivek Jayal), ICICI Securities
Management gave qualitative NIM outlook and identified digital banking as loss-making, though no specific numbers.
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Question
So net net, where do you see NIM settling over the next couple of years? ... is there any product which is still loss-making?
Prince Tiwari (Head of IR) and Gaurav Jain (Interim CFO)
I think we are holding on to yields on the vehicle side... MFI will start to grow... I don't really see yields going down very significantly... digital banking still continues to be loss-making or haven't really broken even.
Answered
Medium priority
MFI provision coverage and growth drivers for FY26
Asked by Pritesh Bumb, DAM Capital
Management explained provision policy and gave specific growth guidance for Wheels.
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Question
Are we 100% provision on MFI today? ... is it safe to say that growth will be driven by these two segments in next year?
Vivek Tripathi (Executive Director and Chief Credit Officer) and Gaurav Jain (Interim CFO)
We provide for only on an uncovered portion... Wheels, even today, has grown about 27% year on year. So we do believe that 25% growth in wheels is something that we should be able to do.
Answered
Medium priority
MFI recovery broad-based and gold loan overlap
Asked by Ankit Bihani, Nomura
Management clearly stated recovery is broad-based and overlap is minimal.
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Question
Is the recent improvement in repayment behavior broad-based across the MFI book, or is it largely driven by borrowers with access to secure products such as gold loans?
Vivek Tripathi (Executive Director and Chief Credit Officer) and Gaurav Jain (Interim CFO)
The MFI recovery is a very, very broad-based recovery... the overlap between the gold loan and MFI book would be very, very minimal.
Answered
High priority
Margin impact of rate cut and growth strategy
Asked by Jignesh Shial, Ambit
Management explained rate cut impact and gave clear growth strategy across segments.
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Question
So previous 25 basis points has been passed on, and the impact will be visible in 4Q... And second, just wanted to understand more on the growth part.
Gaurav Jain (Interim CFO) and Sanjay Agarwal (Founder, MD, CEO)
The December rate cut will get passed on over a period of four months... MFI is seeing a stability... credit card... we still want to wait for one more year... Wheels, mortgages, gold loan will take the front seat.
Answered
Medium priority
OPEX drivers and competitive landscape
Asked by Param Subramanian, Investec
Management provided detailed OPEX drivers and confident competitive positioning.
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Question
Could you give some broad color on the various segments that are driving this so that we can understand this a little better? ... from a competitive landscape, how are you looking at things?
Gaurav Jain (Interim CFO) and Sanjay Agarwal (Founder, MD, CEO)
There are two drivers. One is the 20% quarter on quarter increase in disbursement... The second component is your headcount and touchpoints... We are 30 years old now... we should lead in that competition space.
Partial answer
Medium priority
Savings rate cuts and credit card portfolio changes
Asked by Bhavik Shah, InCred Capital
Management answered savings rate question partially but declined to comment on further cuts and deflected credit card details.
declined to comment on further rate cutsdeflected credit card question as operational
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Question
So what will be the proposal of book below Rs 1 lakh? ... do we plan to further take savings cuts? ... I just wanted to check on your card portfolios.
Sanjay Agarwal (Founder, MD, CEO) and Gaurav Jain (Interim CFO)
The below 1 lakh is a very small amount... further rate, I can't comment as of now... On the credit card, I think the team is not there, and it's too operational question.
Answered
Medium priority
MFI credit cost sustainability and CD ratio focus
Asked by Piran Engineer, CLSA
Management gave clear view on MFI credit cost sustainability and CD ratio as self-governance metric.
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Question
If collection efficiency is stable from year on, credit cost will be at this 30 basis points or so level or below? ... is the CD ratio now even a focal point anymore for RBI?
Vivek Tripathi (Executive Director and Chief Credit Officer) and Sanjay Agarwal (Founder, MD, CEO)
It should hold through the cycle... 83% book is now covered under guarantee... CD ratio is an important one... it's about how we want to really build ourselves on a self-governance basis.