MUMBAI: AU Small Finance Bank, which has received RBI nod to convert into a commercial bank, reported a net profit of Rs 667.66 crore for the December 2025 quarter, up 26.3% from Rs 528.45 crore in the corresponding quarter last year. The improvement was driven by strong growth in core earnings and a sharp reduction in credit costs, which offset higher operating expenses.Net interest income (NII) rose 15.8% year-on-year to Rs 2,341.27 crore, compared with Rs 2,022.71 crore in the December 2024 quarter. Interest earned increased to Rs 4,727.47 crore from Rs 4,113.48 crore, while interest expended rose to Rs 2,386.20 crore from Rs 2,090.77 crore. On a sequential basis, NII increased 9.2% from Rs 2,144.42 crore in the September 2025 quarter, reflecting improved yields on advances and relatively stable funding costs.During the quarter, the bank also announced a series of board and senior management changes as part of a broader leadership realignment. The board approved the appointment of Phani Shankar as non-executive independent director for a three-year term. It also cleared the appointment of Vivek Tripathi, chief credit officer, as whole-time director, subject to regulatory and shareholder approvals. Uttam Tibrewal, who will complete his current term as whole-time director in April 2026, will continue as deputy CEO, while Divya Sehgal, non-executive non-independent director, resigned after completion of the integration of Fincare Small Finance Bank. V G Kannan is set to complete his second term as independent director in January 2026.Other income increased 17.0% year-on-year to Rs 723.80 crore from Rs 618.41 crore a year earlier, supporting overall revenue growth. Total income for the quarter rose to Rs 5,451.26 crore, compared with Rs 4,731.89 crore in the corresponding period last year.Operating expenses climbed 28.8% year-on-year to Rs 1,849.75 crore from Rs 1,436.21 crore, driven by higher employee costs and expansion-related spending, including regulatory-linked adjustments. Despite this, operating profit before provisions remained broadly stable at Rs 1,215.31 crore, compared with Rs 1,204.91 crore in the year-ago quarter.Provisions (other than tax) declined 34.0% year-on-year to Rs 331.14 crore from Rs 501.68 crore, reflecting lower credit costs. Tax expense increased to Rs 216.51 crore from Rs 174.78 crore, in line with higher profitability.Asset quality remained stable, with gross NPAs at Rs 2,880.54 crore, compared with Rs 2,335.51 crore a year earlier, while the gross NPA ratio was largely unchanged at 2.30% against 2.31% in the corresponding quarter last year. The bank’s capital position strengthened, with the capital adequacy ratio improving to 19.01% from 18.01%, providing headroom for future growth.