AU Small Finance Bank Q3 Review - Collection Efficiency Reaches Normalcy: Motilal Oswal
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Motilal Oswal Report
AU Small Finance Bank Ltd. reported strong earnings, led by an improvement in core operating performance and prudent utilization of Aavas stake sale proceeds towards provisions on elevated slippages.
Disbursements picked up in retail, while healthy retail deposit traction enabled improvements in incremental cost of funds (30 basis point QoQ).
On the asset quality front, pro-forma gross non-performing asset/net non-performing asset ratio increased to approximately 3.3%/1.3% as slippages increased to Rs 7.1 billion (largely from wheels and small and medium enterprises).
However, adequate provisions (55%) towards elevated slippages and controlled restructuring gives us comfort on asset quality.
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