Shares of AU Small Finance Bank gained about four percent on Thursday after the lender reported a 32 percent increase in June quarter net profit at Rs 268 crore, when compared with the same quarter in the previous fiscal.

The positive impact of the reported results was largely because of lower provisions. Provisions fell 81 percent to Rs 38 crore.

Additionally, higher profit was also on the back of better asset quality and higher disbursements.

The stock was up 2 percent higher at Rs 588.70 on the BSE by the time the market closed.

“Q1FY23 was one of the best Q1 in the last 5 years in terms of business momentum and collections - disbursement at ₹ 8,445 Crore (+345% YoY), collection efficiency at 105% for Q1,” the bank said in its earnings release.

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In April-June, fund-based disbursements soared 345 percent YoY at Rs 8,445 crore as compared to Rs 1,897 Crore in the same quarter of the previous year which had a low base due to Covid.

Meanwhile, the bank witnessed a growth of 37 percent in its assets under management to Rs 50,161 crore from Rs 36,635 crore. This was coupled with consistent collection efficiency of 105 percent for the quarter under review.

This led to sustained improvement in asset quality ratios.

Further, the private sector bank said its board has approved a Rs 3,000 crore equity raising plan which is likely to have aided gains in the stock.

Morgan Stanley has an ‘Overweight’ call on the banking stock with a target price of Rs 825.

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First Published:Jul 21, 2022 4:13 PM IST