Ujjivan Small Finance Bank Boosts Employee Ownership Through ESOP Allotment

Ujjivan Small Finance Bank (USFB) has taken a significant step to enhance employee ownership and engagement by allotting equity shares under its Employee Stock Option Plan (ESOP). The move, approved by the bank's Stakeholders Relationship Committee, underscores USFB's commitment to aligning employee interests with the bank's long-term growth objectives.

Key Details of the ESOP Allotment

Aspect	Details
Number of Shares Allotted	6,71,386
Face Value per Share	Rs. 10
ESOP Scheme	ESOP 2019

Impact on Paid-up Capital

The allotment of these equity shares has resulted in an increase in the bank's paid-up capital:

Paid-up Capital	Amount (in Rs.)
Before Allotment	19,37,79,17,310
After Allotment	19,38,46,31,170
Increase	67,13,860

Listing Status

Ujjivan Small Finance Bank is currently in the process of seeking listing approvals from both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) for these newly allotted shares.

Implications for Stakeholders

Employees

The ESOP allotment provides eligible employees with an opportunity to benefit from the bank's potential future growth, potentially enhancing motivation and retention.

Investors

While the dilution effect is minimal, this move signals the bank's focus on aligning employee interests with shareholder value creation.

Management

The ESOP scheme reflects the management's strategy to foster a sense of ownership among employees, which may contribute to improved performance and loyalty.

As Ujjivan Small Finance Bank continues to grow, such initiatives aimed at employee engagement and retention may play a crucial role in its long-term success in the competitive banking sector.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
+1.43%	+1.96%	-0.09%	+12.67%	+55.75%	+45.32%

Ujjivan Small Finance Bank (USFB) has delivered a strong performance in Q2, marked by significant improvements in asset quality, deposit growth, and overall financial metrics. The bank's strategic focus on diversification and prudent risk management has yielded positive results, positioning it well for sustained growth.

Key Highlights

Total deposits rose 15.1% year-on-year to ₹39,211 crore
CASA deposits crossed ₹10,000 crore for the first time, growing 22.1% annually
Highest-ever quarterly disbursements of ₹7,932 crore, up 48% year-on-year
Gross loan book grew 14% to ₹34,588 crore
Net interest margin improved to 7.9% from 7.7% in the previous quarter
Profit After Tax (PAT) stood at ₹122 crore

Deposit Growth and CASA Performance

USFB's deposit base showed robust growth, with total deposits increasing by 15.1% year-on-year to ₹39,211 crore. The bank achieved a significant milestone as CASA deposits crossed the ₹10,000 crore mark for the first time, registering a strong 22.1% annual growth to reach ₹10,783 crore. This improvement in CASA ratio reflects the bank's efforts to enhance its low-cost deposit base.

Loan Book Expansion and Asset Quality

The bank reported its highest-ever quarterly disbursements of ₹7,932 crore, marking a substantial 48% year-on-year increase. This strong disbursement growth contributed to a 14% expansion in the gross loan book, which stood at ₹34,588 crore. Notably, the secured loan portfolio reached 47% of the total book, aligning with the bank's strategy to diversify its asset mix.

Asset quality showed significant improvement, with slippages reducing to ₹278 crore from approximately ₹350 crore in previous quarters. The Special Mention Account (SMA) book dropped below 2%, indicating better control over potential stressed assets.

Financial Performance

USFB's financial metrics demonstrated positive trends:

Net Interest Margin (NIM) improved to 7.9% from 7.7% in the previous quarter
Net Interest Income stood at ₹922 crore
Profit After Tax (PAT) was reported at ₹122 crore
Return on Assets (ROA) at 1% and Return on Equity (ROE) at 7.7%

The bank maintained a strong capital position with a Capital to Risk-weighted Assets Ratio (CRAR) of 21.4%, providing a solid foundation for future growth.

Segment-wise Performance

Segment	Growth (Y-o-Y)
Affordable Housing	42%
Micro Mortgages	180%
MSME	69%

The bank's focus on secured lending segments has yielded strong results, with significant growth observed in affordable housing, micro mortgages, and MSME segments.

Outlook

Ujjivan Small Finance Bank expects a meaningful decline in credit costs in the second half of the fiscal year. The management remains optimistic about maintaining the current Net Interest Margin levels of around 7.9% for the remainder of the fiscal year.

With improved asset quality, strong deposit growth, and a diversified loan portfolio, Ujjivan Small Finance Bank appears well-positioned to capitalize on growth opportunities in the small finance banking sector. The bank's strategic focus on increasing its secured loan book while maintaining a strong presence in microfinance is likely to contribute to sustainable growth in the coming quarters.