Pre-Merger Financial Viability of AU and Fincare Small Finance Banks

Abstract

This study conducts a pre-merger analysis of AU and Fincare Small Finance Banks to evaluate their financial soundness and readiness for integration. AU SFB demonstrated superior financial performance and stability, as evidenced by consistently higher net profit margin (NPM), return on assets (ROA), and return on equity (ROE). Both banks maintained Capital Adequacy Ratios (CAR) above regulatory requirements, with no statistically significant difference (p-value = 0.906), signifying comparable resilience to potential risks. However, AU SFB’s stable and consistent financial performance positions it as the stronger entity pre-merger, while Fincare SFB’s declining metrics and variability highlight challenges that could impact integration. The findings underscore AU SFB's capability to drive the merged entity's success, emphasising the need for strategic measures to address Fincare SFB's financial weaknesses for a sustainable and effective merger.