Ujjivan Small Finance Bank (UJJIVANSFB) Q4 16/17 earnings summary

Executive summary

• FY17 marked the transition from microfinance operations to small finance banking; banking operations began Feb 1, 2017, with 15 live branches by Mar 31.

• Consolidated gross loan book, including managed assets, reached ₹6,379.5 crore, up 18% YoY; the first-half growth momentum slowed in Q3-Q4 after demonetization.

• IPO completion, the RBI banking licence and launch of banking services were major milestones; the operating business transferred through a ₹1,530 crore slump sale effective Feb 1.

Financial highlights

• Consolidated total income was ₹1,397.6 crore, up 36% YoY; PAT was ₹207.7 crore, up 17.2% YoY.

• Interest income was ₹1,225.8 crore and other income ₹171.8 crore; total expenditure was ₹1,075.8 crore and PBT ₹321.7 crore.

• Balance sheet reached ₹8,479 crore, up 48% YoY; on-book asset portfolio closed at ₹5,871 crore, up 16%.

Outlook and guidance

• FY18 priorities: phased rollout to ~150+ bank branches, build the liabilities franchise, and expand Affordable Housing and MSE while maintaining moderate microfinance growth.

• Wholesale/institutional deposits are an initial funding priority, alongside deposits from existing borrowers and retail open-market customers; scheduled-bank status was expected in Q2 FY18.

• Cost control and productivity are key priorities as investments in people, technology and infrastructure raise expenses; phased branch conversion is intended to manage costs.

• Management expected credit quality to take several months to normalize; FY18 growth in affected branches would remain cautious while collections were prioritized.