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AU Small Finance Bank on Thursday formalised a plan to make an application for universal banking license while reporting a 30% year-on-year rise in net profit for the June quarter at Rs 503 crore.
The bank has received its board approval for applying for the coveted license. The board has also formed a committee of directors to vet the application. The committee includes chairman HR Khan, independent directors Pushpinder Singh and MS Sriram and managing director Sanjay Agarwal.
AU is one of the two small finance banks which are eligible to apply at this point of time. The other one is Ujjivan Small Finance Bank.
According to the central bank guidelines, profitable and listed small finance banks with a minimum Rs 1000 crore net worth and gross non-performing assets ratio less than 3% for last two fiscals are eligible to seek a transition to universal bank.
AU’s net profit was buoyed by a net interest income growth of 54% year-on-year to Rs 1921 crore while net interest margin for the quarter rose to 6% from 5.7% in the year-ago period. Other income grew by 77% driven by earnings from third party products and credit cards.
Pre-provision operating profit stood at Rs 988 crore, reflecting a 81% year-on-year jump.
The bank’s gross advances expanded 43% year-on-year to Rs 90702 crore at the end of June while deposit rose 40% to Rs 97290 crore. Its asset quality was stable with gross non-performing assets ratio remaining almost unchanged at 1.78% at the end of the reporting period.
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