AU Small Finance Bank gains 7% after RBI releases criteria for voluntary transition of SFBs to universal banks

Shares of AU Small Finance Bank closed over 7% higher on Monday after the Reserve Bank of India (RBI) came out with guidelines for voluntary transition of small finance banks (SFB) to universal banks.

According to a media reports, AU Small Finance Bank is the only lender to have met all the criteria set out by the regulator.

According to the RBI, a small finance bank should have a satisfactory track record of performance for a minimum period of five years and its shares should have been listed on a recognised stock exchange. It should have a minimum net worth of ₹1,000 crore as at the end of the previous quarter and should meet the prescribed capital-to-risk weighted assets ratio (CRAR) requirements for SFBs.

The lender should have a net profit in the last two financial years and should have gross non-performing assets (GNPA) and net non-performing assets (NNPA) of less than or equal to 3% and 1%, respectively, in the last two financial years.

For the fourth quarter of fiscal year 2024, AU Small Finance Bank reported a 10% year-on-year (YoY) growth in its net interest income (NII) at ₹1,337 crore. Pre-provisioning operating profit (PPOP) grew by 16% to ₹664 crore. Net profit excluding exception items stood at ₹428 crore in Q4FY24, up by 1% YoY. The bank said it has taken a one-time pre-tax exceptional impact of ₹77 crore in the fourth quarter towards Fincare merger-related expenses.

AU Small Finance Bank’s gross advances grew by 25% YoY to ₹73,999 crore during the quarter. Total deposits grew 26% to ₹87,182 crore. The board declared a dividend of ₹1 per share for fiscal year 2024.

Shares of the lender lost nearly 18% since the beginning of the year. The stock fell nearly 6% in the last one year.