This article first appeared on GuruFocus .
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Deposits Growth:7.7% QOQ and 22.4% YOY to INR 42,223 crores.
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Credit to Deposit Ratio:88%.
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CASA Ratio:Above 27% for two consecutive quarters.
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Cost of Funds:7.08%, down 26 BPS QOQ.
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Gross Loan Book (GLB):7.1% QOQ and 21.6% YOY to INR 37,057 crore.
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Micro-banking Disbursements:INR 4,688 crore, up 10% QOQ and 62.4% YOY.
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Individual Loans GLB:INR 5,687 crore, growing 4.1% QOQ and 14.8% YOY.
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Affordable Housing GLB:40.3% YOY to INR 8,231 crores.
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MSME GLB Growth:69.1% YOY to INR 2,865 crore.
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Gold Loans Growth:5-fold YOY to INR 557 crores.
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Agri Loans GLB:212% YOY to INR 607 crores.
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Vehicle Loans Growth:120% YOY to INR 823 crore.
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GNPA:2.4% as of December 25.
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Net Interest Margin:8.2%.
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Net Interest Income:INR 1,000 crore, growth of 12.8% YOY and 8.5% QOQ.
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Profit After Tax:INR 186 crore.
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ROA:1.5%.
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ROE:11.5%.
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Release Date: January 22, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Ujjivan Small Finance Bank Ltd ( BOM:542904 ) reported a strong quarter with deposits growing by 7.7% quarter-over-quarter (QOQ) and 22.4% year-over-year (YOY) to INR 42,223 crores.
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The bank's gross loan book grew by 7.1% QOQ and 21.6% YOY, driven by the highest ever quarterly disbursements at INR 8,293 crores.
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Asset quality showed improvement with the SMA book declining and GNPA remaining flat at 1.1%.
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Net interest margin increased to 8.2%, supported by a lower cost of funds and favorable product mix.
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Profit after tax came in at INR 186 crore with an ROA of 1.5% and ROE of 11.5%, indicating strong improvement in profitability.
Negative Points
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The bank's cost to income ratio remained high at 66%, although it was flat QOQ.
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The individual loan portfolio in West Bengal showed a higher par, indicating some regional stress.
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The rejection rate for new customers in the microfinance segment was high, although it has improved from previous levels.
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The affordable housing portfolio saw a decline in yield due to increased competitive intensity and a shift towards higher ticket sizes.
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The bank's ROA guidance for the fiscal year is 1.2% to 1.4%, which may be challenging to achieve given the current ROA of 0.84% for the nine months ended.
Q & A Highlights
Q: What is the status of Ujjivan Small Finance Bank's application for a universal banking license? A: Sanjeev Nautiyal, CEO, stated that the application is actively being considered by the Reserve Bank of India, and they are hopeful for a decision soon.
Q: Can you explain the trajectory of Net Interest Margins (NIMs) and the impact of recent rate cuts? A: Sanjeev Nautiyal, CEO, mentioned that NIMs are expected to remain stable or improve due to initiatives like reducing savings account deposit rates and a favorable portfolio mix. The recent rate cuts are expected to positively impact the cost of funds.
Q: What are the reasons for the increase in yield on Microfinance Institutions (MFI) loans? A: Sanjeev Nautiyal, CEO, clarified that the increase in yield is due to reduced slippages and interest reversals, not because of any changes in lending rates.
Q: How is the bank managing its operational expenses, and what is the outlook for the future? A: Banavar Prabhakar, Part-Time Independent Chairman, explained that the current OpEx to asset ratio is 6.7%, which is higher due to business growth and provisions for the new labor code. They expect this ratio to stabilize in the next quarter.
Q: What is the expected loan mix over the next year, and how will recent rate cuts affect the cost of funds? A: Sanjeev Nautiyal, CEO, stated that they are working on a budget for the next year and remain committed to their Vision 2030. They expect the cost of funds to be around 7% due to recent rate cuts.
Q: When can we expect normalization of credit costs? A: Sanjeev Nautiyal, CEO, indicated that credit costs are expected to normalize by the end of Q1 or Q2 of FY27, with improvements already visible in Q3.
Q: How does Ujjivan plan to sustain margins and cost efficiency as deposits and secured lending expand? A: Barun Agarwal, Deputy CFO, mentioned that the bank is focusing on increasing CASA percentages and diversifying its secured verticals to sustain profitability and improve cost efficiency.
Q: What are the key levers for ROA expansion in the coming years? A: Sanjeev Nautiyal, CEO, highlighted that a diversified book with high-yield products, reduced credit costs, and increased other income streams will support ROA expansion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
