AU Small Finance Bank experienced a notable surge of nearly 5% in its stock price during intra-day trading on April 3, 2025, following the release of its robust business update for the quarter ending March. Investors were encouraged by the bank’s impressive growth in both deposits and advances, showcasing its strength amid changing macroeconomic landscapes.

Strong Deposit Growth

In its operational performance for Q4FY25, AU Small Finance Bank reported total deposits reaching ₹1,24,270 crore, marking a 10.7% sequential increase from ₹1,12,260 crore in December 2024. Year-over-year, deposits significantly rose by 27.2%, up from ₹97,704 crore as of April 1, 2024, following its merger with Fincare SFB.

• CASA deposits also demonstrated solid growth, increasing 5.4% quarter-over-quarter to ₹36,250 crore.
• However, the CASA ratio saw a slight decrease, dipping to 29.2% from 30.6% in the previous quarter.

Lending Performance

On the lending front, AU Small Finance Bank reported a 7.7% quarter-over-quarter increase in gross advances, rising to ₹1,08,780 crore from ₹1,00,989 crore in the prior quarter. The overall gross loan portfolio, which includes securitized and assigned portfolios along with IBPC, expanded by 6.2% to ₹1,15,710 crore. When compared to the previous year, the gross loan book enjoyed a healthy growth rate of 19.9%, climbing from ₹96,490 crore.

Capital Strengthening Initiative

To bolster its capital structure, AU Small Finance Bank has received board approval for a significant move. The bank plans to issue unsecured, rated, listed, redeemable, subordinated, non-convertible Lower Tier II Bonds totaling up to ₹1,500 crore. This issuance, which qualifies as Tier II capital, will be executed through private placement on the Electronic Bidding Platform (EBP) and will be listed in the Wholesale Debt Market segment of BSE Limited.

Stock Market Reaction

Following these positive developments, AU Small Finance Bank’s stock peaked at ₹563.85, reflecting a 4.65% increase during the trading session. Notably, despite this uptick, the stock remains over 25% lower than its 52-week high of ₹755, achieved in September 2024. The stock had previously touched a 52-week low of ₹479 in the preceding month.

Over the past year, shares of AU SFB have seen a 9% decline. Specifically, March witnessed a 5.5% drop in the banking stock, following a nearly 6% decline in February. In contrast, January had shown a positive trend with a 7.5% gain.

Conclusion

AU Small Finance Bank’s latest financial performance illustrates its resilience and growth potential, even amidst challenging economic conditions. As the bank continues to expand its deposit base and lending portfolio, it remains a key player in the financial sector, with strategic initiatives aimed at enhancing its capital foundation. Investors will be keenly watching the bank’s progress in the coming quarters as it navigates the evolving marketplace.