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

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.

Ujjivan Small Finance Bank , a prominent player in the Indian banking sector, has reported strong financial results for the latest quarter, with significant growth in profit, disbursements, and loan book.

Key Financial Highlights

Detailed Analysis

Ujjivan Small Finance Bank demonstrated robust growth across various financial metrics in the latest quarter:

• Net Profit: Increased to ₹122 crore, marking an 18.2% growth quarter-on-quarter.
• Disbursements: Reached a record ₹7,932 crore, up 47.6% year-on-year and 21.3% quarter-on-quarter.
• Gross Loan Book: Expanded to ₹34,588 crore, growing 14.0% year-on-year and 3.9% quarter-on-quarter.
• Deposits: Stood at ₹39,211 crore, up 15.1% year-on-year.
• CASA Deposits: Grew 22.1% year-on-year to ₹10,783 crore.
• Secured Book: Expanded significantly by 52.9% year-on-year to ₹16,173 crore, now representing 46.8% of total loans.
• Net Interest Income: Increased by 7.7% quarter-on-quarter to ₹922 crore.

Asset Quality and Financial Ratios

The bank showed improvement in its asset quality metrics:

• Portfolio at Risk: 4.45%
• Gross Non-Performing Assets (GNPA): 2.45%
• Net Non-Performing Assets (NNPA): 0.67%

Other key financial ratios include:

• Return on Assets: 1.0%
• Return on Equity: 7.7%
• Capital Adequacy Ratio: 21.4% (with Tier I at 19.9%)
• Cost of Funds: Improved to 7.3% from 7.6% in the previous quarter

Conclusion

Ujjivan Small Finance Bank's latest quarterly results demonstrate strong growth and improved financial performance across various parameters. The significant increase in disbursements, expansion of the loan book, and growth in deposits indicate robust business momentum. The improvement in asset quality metrics and the substantial growth in the secured book suggest a focus on risk management and portfolio diversification.

The bank's ability to grow its Net Interest Income while improving its cost of funds reflects effective financial management. The healthy capital adequacy ratio provides a strong foundation for future growth.

Moving forward, Ujjivan Small Finance Bank appears well-positioned to capitalize on its current momentum, with a focus on sustainable growth, asset quality maintenance, and further improvement in profitability metrics.