Asset quality improved sequentially, with gross non-performing assets falling to ₹2,755.6 crore from ₹2,880.5 crore in the previous quarter and net non-performing assets declining to ₹989.9 crore from ₹1,091.5 crore. In percentage terms, gross NPA stood at 2.03% versus 2.30% quarter-on-quarter, while net NPA came in at 0.74% versus 0.88% in the previous quarter.Also Read: AU Small Finance Bank receives RBI nod for Vivek Tripathi as Executive Director
Cost of funds declined 12 bps sequentially to 6.49%. Core other income increased 14% year-on-year and 7% quarter-on-quarter to ₹748 crore, while overall other income stood at ₹731 crore, down 4% year-on-year but up 1% sequentially.
Operating expenses rose 26% year-on-year and 6% quarter-on-quarter to ₹1,962 crore. The cost-to-income ratio improved to 59.2% in Q4 FY26 from 59.7% in Q3 FY26, excluding exceptional items. Pre-provisioning operating profit increased 5% year-on-year and 11% sequentially to ₹1,352 crore.
Return on assets stood at 1.8% for Q4 FY26 and 1.6% for FY26, while return on equity was 17.0% for the quarter and 14.2% for the full year. Cost-to-assets ratio declined to 4.1% in FY26 from 4.3% in FY25, excluding the CGFMU premium.Also Read: AU Small Finance Bank, CheQ launch LED credit card that lights up during tap-to-pay transactions
Total deposits grew 23% year-on-year and 10% quarter-on-quarter to ₹1,52,661 crore, while CASA deposits increased about 20% year-on-year and nearly 9% sequentially. Gross loan portfolio grew 21% year-on-year and 8% quarter-on-quarter to ₹1,40,327 crore. Secured businesses, including retail and commercial, rose 23% year-on-year and 7% sequentially.
Unsecured businesses, comprising MFI, credit card and personal loans, grew 7% sequentially, led by MFI and personal loans, while declining 1% year-on-year. Credit cost improved to 0.96% of average assets in FY26 from 1.3% in FY25, and stood at 1% including CGFMU premium.
During Q4 FY26, the bank added 64 physical touchpoints, including 13 new deposit branches, taking the total network to 2,790. Separately, AU Small Finance Bank appointed Gaurav Jain as the Chief Financial Officer of the company, effective April 27, 2026.
Also Read: AU Small Finance Bank Q4 Update: Deposits rise 22.8% YoY to ₹1.53 lakh crore; advances grow 25.1%
Sanjay Agarwal, Founder, MD & CEO, AU Small Finance Bank, said, “It takes at least a decade to build the foundation of a strong bank and entering our tenth year is a deeply meaningful milestone for all of us at AU. Building a Forever Bank demands consistency in strategy, in execution and in values. FY2026 reflects exactly that.
We have strengthened our franchise, embedded technology into our core, and invested in every dimension that matters, like governance, leadership, distribution and scale. This month, we launched our first Agentic AI platform and our first AI-native Loan Origination System on that platform, signalling our intent to fundamentally reimagine banking. I am genuinely excited about what lies ahead and look forward to sharing more in the quarters to come.”
Shares of AU Small Finance Bank Ltd ended at ₹1,043.45, down by ₹22.15, or 2.08%, on the BSE.
