In comparison between the second quarter of FY23 and the second quarter of FY22, AU Small Finance Bank reported a 23% rise in net profit to Rs 343 crore on a 44% increase in net interest income (NII) to Rs 1,083 crore.

The bank’s operating expenses jumped 51% to Rs 832 crore in the second quarter of FY23 from Rs 553 crore in the second quarter of FY22.

In the second quarter of FY23, PPOP was Rs 499 crore, up by 27% from Rs 392 crore in the same quarter of last year. Provisions surged to Rs 43 crore in Q2FY23 from Rs 5 crore recorded in Q2FY22. Profit before tax in the second quarter of FY23 stood at Rs 456 crore, up by 18% from Rs 388 crore in the second quarter of FY22.

Cost to income for the second quarter of FY23 declined 277 bps to 62.5% from 65.3% in the first quarter of  FY23. “Inflationary pressures and high-interest rates remain a key risk for opex in the current environment, the bank said in a statement.

On the asset quality front, the bank’s gross non-performing assets (NPAs) stood at Rs 997 crore in Q2FY23 as compared to Rs 970 crore in Q1FY23 and Rs 1,151 crore as of Q2FY22. Gross NPA improved to 1.9% of gross advances as of Q2FY23 as compared with 1.96 per cent in Q1FY23 and 3.16% in Q2FY22.

Sanjay Agarwal, MD and CEO of AU Small Finance Bank, said, “The operating environment in Q2 FY23 saw uncertainty over inflation, liquidity, and rates intensify significantly, which continues to be the case. While the domestic outlook is encouraging, the possibility of a lagged impact of these factors on demand and activity levels can’t be ignored, and we are watchful.”

Till the end of the second quarter, overall 980 banking touchpoints while serving 33.3 lakh customers in two union territories and 20 states, AU Small Finance Bank (AU Bank). On BSE, the stock went down 3.59% to recent trade at Rs 603.95.