Ujjivan Small Finance Bank reported robust business growth for the quarter ended September 30, 2026 (Q2FY27), with its gross loan book expanding 32.1% year-on-year to ₹45,699 crore and total deposits rising 29.2% to ₹50,649 crore.

The bank’s asset quality metrics showed improvement, with the Gross NPA ratio declining to 2.10% from 2.45% in Q2FY26. The Provisioning Coverage Ratio (PAR) also improved slightly to 3.57% from 4.45% in the corresponding period last year.

Deposit mobilization and CASA trends

Total deposits grew significantly, reflecting a 5.2% sequential increase from Q1FY27. The Current Account Savings Account (CASA) ratio stood at 26.0%, a slight dip from 27.5% in Q2FY26 but a marginal decline from 26.9% in the previous quarter. The Credit-Deposit (CD) ratio, excluding securitization, increased to 89.97% from 87.78% a year ago, indicating efficient deployment of funds.

Loan book expansion across segments

The gross loan book witnessed substantial growth across key segments. Housing loans surged 38.2% YoY to ₹12,087 crore, while the MSME segment expanded 51.3% to ₹3,871 crore. Gold loans saw the highest percentage growth, jumping 209.7% to ₹1,275 crore. The secured book now constitutes 52.0% of the total loan portfolio, up from 46.8% in Q2FY26.

Disbursement momentum

New disbursements reached ₹10,560 crore in Q2FY27, marking a 33.1% increase YoY and a 14.2% rise QoQ. The Financial Inclusion Group (FIG) segment led disbursement growth with an 81.6% YoY jump to ₹2,456 crore, followed by Gold Loans which rose 136.0% to ₹506 crore.

What the numbers show

A notable divergence exists between the rapid expansion of high-growth, often unsecured or semi-secured segments like Gold Loans (+209.7%) and MSME (+51.3%) versus the more moderate growth of traditional Group Loans (+19.5%). Despite this shift toward potentially higher-risk assets, the bank managed to reduce its Gross NPA ratio by 35 basis points YoY. This suggests that the improved collection efficiency in Micro Banking (Bucket X efficiency at 99.72%) and lower write-offs (₹43 crore vs ₹213 crore last year) are effectively offsetting the risk profile changes in the loan mix.

Ujjivan Small Finance Bank has raised its FY27 credit cost forecast to 2.0-2.2%, while also revising its FY27 return on assets forecast upward, citing record pre-provision operating profit.

Key management guidance for FY27

Management has outlined three key updates to its FY27 outlook, reflecting shifts in both asset quality expectations and profitability projections. The following table summarises the guidance provided:

Credit cost and profitability outlook

The upward revision in the FY27 credit cost forecast to 2.0-2.2% signals a recalibration of asset quality expectations by the bank's management. Alongside this, the FY27 return on assets forecast has been raised, with management attributing the improvement to record pre-provision operating profit (PPOP). Management has also stated that no yield pressure is anticipated in FY27, indicating stability on the income side of the balance sheet.

These three guidance points together present a mixed but stabilising picture: higher provisioning expectations are offset by stronger operating profitability and a steady yield environment.