Ujjivan Small Finance Bank Shares Tumbled Over 4% Post Q2 FY25 Results Announcement

On October 24, 2024, Ujjivan Small Finance Bank Ltd released its financial performance report for the quarter ending September 30, 2024. The bank has shown positive trends in various key metrics, reflecting its growth and stability in the small finance sector.

Business Performance Highlights for Q2 FY25

Assets

The gross loan book reached ₹30,344 crore, marking a 14% increase year-on-year (YoY) and a 1% rise quarter-on-quarter (QoQ). As of September 2024, the secured loan portfolio constituted 34.9%, up from 31.3% in June 2024. However, disbursements in Q2 FY25 totalled ₹5,376 crore, showing a 6% decrease YoY but a slight 2% increase QoQ.

Collection and Asset Quality  

The collection efficiency stood at approximately 97% in September 2024, with non-defaulting accounts (NDA) maintaining a consistent collection rate of around 99%. The portfolio at risk was reported at 5.1%, while the gross non-performing assets (GNPA) rose to 2.5% compared to 2.3% in June 2024. The net non-performing assets (NNPA) also increased from 0.4% to 0.6%. The bank recorded a write-off of ₹140 crore in Q2 FY25, with a provision coverage ratio of 78% as of September 2024.

Deposits and Financial Metrics

Deposits  

Total deposits reached ₹34,070 crore as of September 2024, reflecting a growth of 17% YoY and 5% QoQ. The current account and savings account (CASA) stood at ₹8,832 crore, up 26% YoY, resulting in a CASA ratio of 25.9%, a slight increase from 25.6% in June 2024. Retail term deposits amounted to ₹15,914 crore, marking a 35% increase YoY and a 2% rise QoQ.

Financial Performance  

For Q2 FY25, the net interest income (NII) was ₹944 crore, representing a 15% increase YoY and a marginal 0.2% increase QoQ, with a net interest margin (NIM) of 9.2%. The cost-to-income ratio was reported at 60%. The pre-provision operating profit (PPoP) for the quarter stood at ₹461 crore, leading to a profit after tax (PAT) of ₹233 crore. Return on assets (RoA) and return on equity (RoE) were reported at 2.2% and 15.7%, respectively.

Capital and Liquidity Position

The bank’s capital adequacy ratio was strong at 23.4%, with Tier-1 capital at 21.6%. The provisional daily average liquidity coverage ratio (LCR) for September 2024 was reported at 130%, indicating a robust liquidity position. 

Mr. Sanjeev Nautiyal, MD & CEO of Ujjivan Small Finance Bank said, “Ujjivan has always stood strong and successfully navigated headwinds in the industry. Similarly, our resilient business model and sound reading of the on-ground situation have always kept us better prepared to identify and manage such issues confidently. As we had mentioned in our previous interactions, we had emanated pockets of stress across the country due to elevated indebtedness levels. Hence, we have proactively developed a cautious approach in terms of growth in the microfinance space and have beefed up our vigilance to manage asset quality”

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