MFI asset quality deterioration
Collection efficiency dropped to 98.3% and full-year credit cost for MFI is now expected at ~5% vs prior 3-4% guidance. Recovery pushed back by one quarter.
AUBANK / Q1-FY26 / risks
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AU Small Finance Bank · Material risks, their source context, and severity in the latest available quarter.
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Material risks this quarter
high
Southern mortgage book stress
Credit cost elevated in the southern mortgage book (15% of total mortgages) due to transition issues post-Fincare merger. Management expects normalization by year-end.
Competitive intensity in mortgages may cap growth
Management acknowledged high competition in the mortgage segment, which could pose downside risk to the target of growing the book to 20%+.
Credit card credit cost may remain elevated
Although absolute credit cost has peaked, credit card losses remain high and may persist through Q2 before normalizing in H2.