AU Small Finance Bank shares fall 10%, most since 2021 after asset quality deteriorates

Brokerage firm Citi has maintained its "neutral" stance on the stock but have cut their price target to ₹790 from ₹832 earlier. The brokerage attributed the asset quality deterioration to credit card stress and write-offs worth ₹120 crore along with lower recoveries.

Core Net Interest Margin (NIMs) were also under pressure as funding costs rose by 20 basis points, while yields moderated by 10 basis points.

Pressure in the March quarter will lead to NIMs settling at the lower end or below its guidance, Citi wrote in its note.

Out of the 27 analysts that track AU Small Finance Bank, 10 each have a "buy" and "sell" rating, while the other seven have a "hold" recommendation.

Shares of AU Small Finance Bank are locked in a 10% lower circuit at ₹637.1. The stock has declined in three out of the last four trading sessions and has declined 15% during that period.