AU Small Finance Bank on Saturday reported a 16% year-on-year increase in its net profit to Rs 581 crore for the first quarter of FY26, up from Rs 503 crore in the same period last year. The Jaipur-headquartered lender posted growth in both income and profitability, though asset quality weakened during the quarter.Total income for Q1FY26 rose to Rs 5,189 crore from Rs 4,278 crore a year earlier. Interest earned increased to Rs 4,378 crore from Rs 3,769 crore, while net interest income climbed to Rs 2,045 crore from Rs 1,921 crore, PTI reported.Operating profit for the quarter stood at Rs 1,312 crore, up from Rs 952 crore in the corresponding quarter of the previous year.Gross non-performing assets (NPAs) increased to 2.47% of gross advances as of June 30, 2025, compared to 1.78% a year earlier. Net NPAs also rose to 0.88% from 0.63%.As a result, provisions and contingencies surged to Rs 533 crore, nearly double the Rs 283 crore reported in the year-ago period. The bank’s Provision Coverage Ratio (PCR) stood at 83% at the end of the June quarter.AU Small Finance Bank’s gross loan portfolio rose 18% year-on-year to Rs 1,17,624 crore, compared to Rs 99,792 crore in Q1FY25. However, the capital adequacy ratio dipped to 19.42% from 20.11% a year ago.Commenting on the results, MD and CEO Sanjay Agarwal said, “We have reported another set of consistent performance in a seasonally soft quarter, showing sustainable growth in deposits, assets, and profitability.”He added that as the economic cycle strengthens, the bank remains well-positioned to navigate near-term uncertainties while pursuing its long-term vision of building a scalable and sustainable institution.