3 banks with triple-digit profit growth at up to 72% lower P/Bs than AU Small Finance Bank
Executive Brief • Key Highlights
Fast factual intelligence distilled for busy investors, executives, and answer bots:
- ✓Small finance banks reported triple-digit profit growth in the September 2026 quarter.
- ✓These banks focused on high-margin gold, vehicle, and micro-finance loans to achieve net interest margins between 6% and 8%.
- ✓Many now trade at a 50% to 72% discount to AU Small Finance Bank, which had 5.8% margins.
Story at a Glance
- Category
- Indian Markets
- Reported By
- Financial Express
- Reading Speed
- 9 Minute(s)
- Market Focus
- India Economy
Yes, we are referring to small finance banks (SFB), which are required to ensure that almost half of their loans / advances are below Rs 25 lakh, and are also directed to small, local businesses and low-income households.
Also, it is understood that SFBs must ensure nearly 60% of their credit is for priority sector loans as compared to 40% for PSU and private banks.
SFB have been broadly successful in managing the ‘soft’ interest environment that was followed by RBI till the end of the second quarter of FY27, via their focus on high-margin gold loans, SME, vehicle and micro-finance loans in the regions / states they operate in.
And this strategy of SFBs has enabled them to earn impressive net interest margins (NIMs) that are between 6% to 8% in Q2FY27 and broadly higher y-o-y, and superior to Jaipur-based AU Small Finance Bank. AU Small Finance Bank had NIMs of 5.8% in the quarter under review.
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Financial Express
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