AU Bank logs 42% jump in its gross advances as of June-end

Kolkata: AU Small Finance Bank, which focuses on vehicle financing and lending to small business units, has seen a 42% year-on-year (YoY) jump in gross advances, raising hopes of steady business activity despite soaring price pressures and rise in interest rates.

Its gross advances stood at Rs 49,366 crore at the end of June while asset under management (AUM) was at Rs 50,179 crore registering a 37% yearly rise, according to the provisional business numbers shared by the bank.

Loan disbursement grew 4.5 times to Rs 8,926 crore in the first quarter of FY23, which is typically a slack business season.

“Despite rising inflation and interest rate hardening, positive sentiment on the ground coupled with resilient consumption supported economic activity and income generation,” the bank said in a regulatory filing to stock exchanges. “These factors also resulted in better collections for us than historically seen in Q1 of a financial year.”

The first quarter data of FY22 was however not exactly comparable as that period was a complete wash out business wise due to the second wave of Covid pandemic.

The bank said that the reversal in interest rate cycle this year saw the incremental cost of funds going up but it was well-compensated by simultaneous increase in the disbursement yields during the quarter.

Its average cost of funds came down in the first quarter to 5.7% compared with 6.3% in the year-ago period.

AU’s deposits jumped 48% year-on-year to Rs 54631 crore with 39% of it being low-cost current and savings accounts.

These business numbers perhaps are an indication that the economic recovery in non-metros may not be hampered as feared initially when the Reserve Bank of India signalled the reversal of the soft interest rate cycle to rein in inflation.