Intense competition in southern markets
Management acknowledged that southern markets are overcrowded with next-level competition, making ramp-up in Fincare branches slower than expected.
AUBANK / Q3-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
medium
MFI event risk
MFI recovery is broad-based but remains vulnerable to external events that could derail the credit cycle, as noted by management.
Asset yield compression from repo rate cuts
The December repo rate cut will impact ~30% of the variable-rate book, with full effect expected in Q4, potentially pressuring NIM.
Elevated operating expenses
OpEx increased 14% QoQ due to higher disbursements, headcount additions, and marketing spend, which could pressure cost ratios if growth moderates.