Ujjivan Small Finance Bank , a key player in the small finance banking sector, has reported a decline in its Current Account Savings Account (CASA) ratio, signaling a shift in its deposit composition. The bank's CASA ratio has fallen to 24.3% from 25.6% compared to the same period last year, indicating a reduction in the proportion of low-cost deposits in the bank's total deposits.

CASA Ratio Decline

The CASA ratio is a crucial metric for banks, as it represents the portion of deposits that typically incur lower interest costs. A higher CASA ratio generally indicates better profitability for a bank. The decrease in Ujjivan Small Finance Bank's CASA ratio suggests that the bank may be relying more on higher-cost deposits to fund its operations.

Financial Position

Despite the dip in the CASA ratio, Ujjivan Small Finance Bank's balance sheet shows signs of growth:

The bank has seen significant growth in its total assets, with a 17.98% increase year-over-year. Investments have also grown by 20.11%, indicating the bank's efforts to diversify its portfolio and potentially offset the impact of the lower CASA ratio.

Asset Quality and Liquidity

Current assets have shown a robust increase of 24.75%, rising from ₹3,119.10 crore to ₹3,891.00 crore. This growth in current assets could help maintain the bank's liquidity position, which is crucial given the decrease in low-cost deposits.

Equity and Capital Position

The bank's total equity has grown by 8.37% to ₹6,083.40 crore, suggesting an improvement in its capital position. This increase in equity could provide a buffer against potential risks associated with the changing deposit mix.

Conclusion

While Ujjivan Small Finance Bank's declining CASA ratio may pose challenges in terms of cost of funds, the overall financial indicators point to a growing balance sheet. The bank's management may need to focus on strategies to improve its low-cost deposit base while continuing to manage its growth trajectory. Investors and analysts will likely keep a close eye on how the bank navigates this shift in its deposit composition and its impact on future profitability.

Ujjivan Small Finance Bank has demonstrated strong financial performance in Q1 FY26, reporting significant growth in both its loan book and deposit base. The bank's latest figures reveal a positive trajectory in its core business areas.

Deposit Growth

Ujjivan Small Finance Bank has witnessed a substantial increase in its deposit base. The bank's total deposits have grown by 18.80% year-on-year to ₹38,612.00 crore. This growth in deposits indicates increasing customer trust and the bank's ability to attract and retain depositors.

Loan Book Expansion

The bank has achieved a notable 10.70% year-on-year increase in its gross loan book, which now stands at ₹33,287.00 crore. This expansion reflects the bank's continued focus on growing its lending activities and catering to the financial needs of its target customer segments.

Sector-wise Performance

Ujjivan Small Finance Bank has shown particularly strong growth in specific loan segments:

• Affordable housing loans rose by an impressive 53.10% year-on-year
• MSME loans increased by 59.30% compared to the previous year

These figures highlight the bank's success in targeting key growth areas within its loan portfolio.

Disbursements and Asset Quality

Overall disbursements for Q1 FY26 grew by 23.80% year-on-year, reaching ₹6,543.00 crore. This indicates a robust demand for the bank's loan products.

However, the Gross Non-Performing Assets (GNPA) ratio stood at 2.50%, showing an increase from the previous quarter. This suggests a slight deterioration in asset quality that may require monitoring.

CASA Ratio

The Current Account Savings Account (CASA) ratio declined to 24.30%. While still representing a significant portion of the bank's deposits, this decrease may indicate a shift in the composition of the bank's deposit base.

Market Implications

The reported growth in Ujjivan Small Finance Bank's key financial metrics, particularly in deposits and targeted loan segments, may be viewed positively by investors and market analysts. It demonstrates the bank's ability to expand its business in a competitive banking landscape, particularly within the small finance bank segment.

As Ujjivan Small Finance Bank continues to show strong performance in its core operations, it reinforces its position in the banking sector and its commitment to serving its target market segments. However, the slight increase in GNPA and decrease in CASA ratio suggest areas for potential improvement in the coming quarters.