AU Small Finance Bank shares slump 7% after Q1 margins shrink
[hfe_template id='11223']
[ad_1]
Shares of AU Small Finance Bank fell as much as 7.3% on Monday to Rs 736.95 on the BSE after the lender reported a mixed set of earnings for the June quarter, with shrinking margins and deteriorating asset quality overshadowing a 16% rise in net profit. Net profit rose to Rs 581 crore for the April–June quarter, up from Rs 503 crore a year ago, driven by strong treasury gains. However, the bank’s core lending performance showed strain, with net interest margin (NIM) narrowing by 38 basis points to 5.4%. “Net interest margins have started to shrink as banks began to transmit the rate cuts,” the bank said in a stock exchange filing. Net interest income (NII), a key measure of a bank’s profitability, grew 6% year-on-year to Rs 2,045 crore from Rs 1,921 crore. Asset quality weakened during the quarter, with the gross non-performing assets (GNPA) ratio rising to 2.47% from 1.78% a year earlier. This led to a sharp increase in provisions, which...