Ujjivan Small Finance Bank has expanded its service portfolio with the launch of comprehensive foreign exchange services and Exchange Earners' Foreign Currency (EEFC) accounts, targeting customers engaged in cross-border transactions. This strategic move positions the bank to better serve the growing demand for international banking solutions across various customer segments.

Comprehensive Foreign Exchange Services

The bank's new foreign exchange services encompass a complete range of cross-border transaction solutions. The offerings include inward and outward remittances, enabling customers to receive funds from overseas and send money abroad seamlessly. Additionally, the services feature foreign currency deposit facilities, allowing customers to maintain balances in multiple currencies according to their international business or personal requirements.

EEFC Accounts for Foreign Currency Earners

Alongside the general forex services, Ujjivan Small Finance Bank introduced specialized EEFC accounts designed for exporters, freelancers, and professionals earning in foreign currency. These accounts provide significant flexibility by allowing holders to retain foreign exchange earnings without immediate conversion into Indian rupees, ensuring compliance with Foreign Exchange Management Act (FEMA) regulations.

The EEFC facility supports multiple freely convertible currencies and can be utilized for various permissible transactions. Account holders can use these funds for business payments, travel expenses, and trade-related transactions, providing enhanced financial flexibility for international operations.

Service Delivery and Support Infrastructure

The foreign exchange services are accessible through both digital and branch banking channels, ensuring comprehensive coverage for different customer preferences. The bank has established dedicated forex teams to support these services, providing specialized assistance for complex international transactions and regulatory compliance requirements.

Target Market and Strategic Impact

The new services are specifically designed to support small and medium enterprises, non-resident Indians, and travelers with international banking requirements. This expansion represents a significant enhancement of Ujjivan Small Finance Bank's international banking capabilities, positioning the institution to capitalize on rising cross-border trade and increasing overseas earnings among its customer base.

The launch addresses the growing market demand for sophisticated foreign exchange and remittance services, particularly as businesses and individuals increasingly engage in international transactions. By offering these comprehensive solutions, the bank strengthens its competitive position in the evolving financial services landscape.

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.