The Board of Directors of AU Small Finance Bank Limited at its meeting held today, approved the financial results for the quarter ended December 31, 2024. Executive Summary After seeing some pick-up during festive season, the economic momentum turned subdued during the latter part of Q3 but overall environment is relatively better than H1’FY25. Liquidity remained in deficit for most part of the quarter leading to consistent pressure on interest rates and deposit growth. Additionally, unsecured advances (esp. MFI) continue to be in a corrective phase across industry. Amidst this operating environment, the Bank has delivered a well-rounded performance and focused on tighter underwriting, managing cost of funds and controlling opex. Performance at a glance: Profitability Q3’FY25 highlights The Bank’s pre-provisioning operating profit (PPoP) for Q3’FY25 grew 85% YoY to ₹1,205 Crore compared to ₹650 Crore in Q3’FY24. PAT was up 41% YoY and saw a decline of 7% QoQ at ₹528 Cr (Vs. ₹375 Cr in Q3’FY24 and ₹571 Cr in Q2’FY25) Operating expenses in this quarter was down by 3% QoQ to ₹1,436 Cr and up 29% YoY Cost to Income declined by 886 bps YoY to 54.4% in Q3’FY25 Net Interest Margin (NIM) for Q3’FY25 stood at 5.9% The Return on Asset (ROA) and Return on Equity (ROE) for Q3’FY25 stood at 1.5% and 13.0% respectively Commenting on the performance, Mr. Sanjay Agarwal, Founder, MD & CEO, AU Small Finance Bank said, “The economy saw some bounce back during festive season, however the momentum slowed down towards the latter half of the quarter. Overall economic activity whilst better than H1, remains below market expectations. Tight liquidity and persistent inflation continue to pose challenge to deposit growth and interest rates” Amidst this backdrop and in a highly competitive market, our performance in the first 9 months of the financial year has been resilient. We continue to grow at higher rates than the industry across both advances and deposits. Our secured assets franchise remains in a very good shape, however Microfinance business continues to see elevated credit cost and degrowth in line with the industry. We remain focused on empowering individuals and businesses, contributing to India’s economic resilience and sustainable growth and I am thankful to the Government for supporting the MSME and Micro credit sector with various guarantee schemes”.