Ujjivan Small Finance Bank (UJJIVANSFB) Q2 24/25 earnings summary

Executive summary

• Gross loan book reached INR 30,344 crore, up 14% YOY; total deposits at INR 34,070 crore, up 17% YOY; loan book growth driven by secured portfolio expansion, while microfinance stress slowed overall growth.

• Net Interest Income for Q2 FY25 was INR 944 crore, up 15% YOY; Net Profit at INR 233 crore, down 29% YOY due to higher credit costs and asset quality stress.

• Affordable Housing disbursements rose 40% YOY and 70% QOQ, with the book growing 43% YOY to INR 5,784 crore; MSME disbursements increased to INR 216 crore, up 66% QOQ.

• Secured portfolio now forms 34.9% of the total book, targeting 40%-42% by year-end; secured book contribution in disbursements rose to 73% in Q2 FY25.

• Results include the impact of the amalgamation with erstwhile Ujjivan Financial Services Limited, making them not comparable with prior periods.

Financial highlights

• Retail deposits grew 17% YOY and 5% QOQ to INR 34,070 crore; retail deposits now 73% of total, up 32% YOY.

• CASA book at INR 8,832 crore, up 26% YOY and 6% QOQ, now 25.9% of total deposits; credit to deposit ratio at 87.4%.

• NIM for the quarter was 9.2%, up 23 bps YOY; expected to compress further as secured book grows.

• Cost-to-income ratio at 60% for Q2 FY25; PPOP for Q2 FY25 was INR 461 crore, down 5% YOY.

• ROA and ROE for Q2 FY25 at 2.2% and 15.7%, respectively; net profit for Q2 FY25 stood at INR 23,303 lakh, compared to INR 32,774 lakh in Q2 FY24.

Outlook and guidance

• Secured portfolio expected to reach 40%-42% of total book by year-end; individual loan growth in microfinance targeted at 17% for FY25.

• Credit cost guidance revised to 2.3%-2.5% for FY25, reflecting anticipated higher slippages.

• ROE expected to soften in FY25 but targeted at 18%-20% for FY26 as microfinance recovers.

• NIM expected to be slightly below 9% for the full year; focus on expanding digital banking and analytics.

• Transition to new RBI investment portfolio norms from April 1, 2024, impacts comparability of investment results.