AU Small Finance Bank's (NSE: AU SFB) shares experienced a significant 9% drop, landing at Rs 630 ($1 = Rs 83.25) on the NSE. This sharp decrease followed the approval of its merger with Fincare Small Finance Bank, triggering high trading volumes of over 2.525 million shares around 10:15 a.m. IST. The share exchange ratio has been determined at 579 AU SFB shares for every 2,000 Fincare SFB shares, as part of an implementation agreement involving Fincare's promoter company, Fincare Business Services Limited.
In the third quarter of the fiscal year 2023-24, prior to the merger approval, AU SFB reported a standalone net profit surge of 17%, amounting to Rs 402 crore (Rs 1 crore = $120,127). This was primarily driven by an increased net interest income of Rs 1,249 crore and a total income rise to Rs 2,957 crore.
The bank's gross Non-Performing Assets (NPAs) remained stable at 1.91%, while its net NPAs saw a slight increase to 0.60%. Over the same period, AU SFB's Capital Adequacy Ratio underwent a decrease, standing at 22.4%. Meanwhile, the bank reported a net interest margin of 5.5%.
The merger between AU SFB and Fincare SFB marks a significant development in India's banking sector, with potential implications for future consolidations within the industry.
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