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    Ujjivan Small Finance Bank Limited

    UJJIVANSFB
    Financial Services·22 Jan 2026
    Management Summary

    Ujjivan Small Finance Bank delivered a strong Q3 FY26, marked by robust growth in deposits and loan book, and significant improvements in profitability and asset quality. NIM expanded to 8.2% driven by lower cost of funds, while PAT, ROA, and ROE all saw healthy increases. Despite some stickiness in asset quality for specific segments and a higher OPEX ratio due to one-off items, the bank remains optimistic about future credit cost normalization and continued growth.

    Highlights

    7

    • Deposits grew 7.7% QoQ and 22.4% YoY to Rs. 42,223 crores.

    • GLB grew 7.1% QoQ and 21.6% YoY to Rs. 37,057 crores, driven by highest-ever quarterly disbursements of Rs. 8,293 crores.

    • Net Interest Margin (NIM) was sequentially higher at 8.2%, supported by lower cost of funds (7.08%, down 26 bps QoQ).

    • Net Interest Income (NII) reached Rs. 1,000 crore, a growth of 12.8% YoY and 8.5% QoQ.

    • Profit After Tax (PAT) was Rs. 186 crore, with ROA of 1.5% and ROE of 11.5%, indicating strong improvement in profitability.

    • Asset quality improved with PAR below 4% and PCR at 76%, up 3% QoQ, with credit cost at Rs. 195 crores.

    • CASA percentage remained healthy, staying above 27% for 2 consecutive quarters.

    Concerns

    4

    • OPEX to asset ratio was 6.7%, higher by 40 bps QoQ, partly due to a one-off Rs. 18 crore gratuity provision.

    • Individual PAR 0 number on the West Bengal side remained sticky for the last 2-3 quarters.

    • Mild degeneration in Affordable Housing disbursement QoQ and yield decline due to shift to higher ticket sizes and increased competitive intensity.

    • IL PAR 90+ increased from 2.3% to 2.7% due to specific issues in Karnataka.

    Key financials

    Single quarter

    16 metrics
    1. 01Deposits₹42,223 Cr+22.4%YoY
    2. 02Gross Loan Book (GLB)₹37,057 Cr+21.6%YoY
    3. 03Net Interest Income (NII)₹1,000 Cr+12.8%YoY
    4. 04Net Interest Margin (NIM)8.2%
    5. 05Profit After Tax (PAT)₹186 Cr

    Segment breakdown

    Micro-banking
    ₹4,688 Cr Disbursements1.4 lakhs New Customer Additions99.7% Bucket X Collection Efficiency35% Rejection Rate2.4% Customers with 3+ Lenders
    Group Loans (GL)
    ₹5,687 Cr GLB
    Affordable Housing
    ₹8,231 Cr GLB3.3% PAR110.0% GNPA55% PCR
    Micro Mortgage
    ₹1,329 Cr GLB
    MSME
    ₹2,865 Cr GLB37.4% Disbursement Growth4.1% GNPA
    Gold Loans
    ₹557 Cr GLB₹100 Cr Disbursement Capacity
    Agri Loans
    ₹607 Cr GLB
    Vehicle Loans
    ₹823 Cr GLB1.8% GNPA
    List

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Liquidity disclosed

    LCR at 165.6% as of December 25. Savings account deposit rates in the lowest 2 brackets have been reduced by 25 basis points and 50 basis points respectively. Cost of funds for the quarter was 7.08%.

    Guidance & targets

    14
    CategoryTargetPriority
    Regulatory
    Universal Bank License Approval
    As quickly as possible
    		Low
    Profitability
    Net Interest Margin (NIM)
    At least stay at the same level (8.2%)
    		Medium
    Profitability
    Return on Assets (ROA)
    1.8%-2%
    		High
    Profitability
    Return on Equity (ROE)
    10%-12%
    		High
    Profitability
    Return on Assets (ROA)
    1.2%-1.4%
    		High
    Cost of Funds
    Exit Cost of Fund
    Around 7%
    		High
    Asset Quality
    Credit Cost Normalization
    Normalization
    		High
    Loan Book Mix
    Unsecured vs. Secured Book Mix
    30%-35% unsecured, balance secured
    		High
    Loan Book Mix
    Unsecured vs. Secured Book Mix (FY end)
    50-50 (this year), progress towards 30-70 by 2030 (5% annually)
    		High
    Deposits
    CASA Percentage
    Towards 35%
    		High
    Deposits
    CASA Percentage Growth
    Increasing going forward
    		Medium
    Deposits
    CASA Level
    Maintain same level this year, improve next year
    		High
    Manpower
    Collection Team Manpower
    Decline of between 100-150 people
    		High
    Operational Efficiency
    OPEX to Assets Ratio
    Decline
    		Medium

    What to watch in Q4 FY26

    5

    OPEX to Assets Ratio

    FY27
    Current6.7%
    TargetDecline from 6.7%

    Why it matters

    A decline in this ratio is crucial for improving overall profitability and operational efficiency.

    Yes. Next year, you should see an improvement. But this year, it will be at the same level. And this is what we had planned also in our budget for the year. ... Yes, it should go in that direction. But as Mr. Nautiyal said that we are working on our plan and we will come back📌 with the final figures and guidance for FY '27 by the next quarter. So, I would request you to give us some time on that.

    Risks & concerns

    3
    RiskSeverity

    West Bengal Political Movement/Elections

    Analyst raised concerns about political movement in West Bengal and its impact on micro-banking, but management stated they don't foresee significant disturbance due to long presence, metro/urban focus, and diversified portfolio. — Analyst downplayed

    low

    Competitive Intensity in Affordable Housing

    Management noted increased competitive intensity in the Affordable Housing segment, contributing to a decline in yield. — Management acknowledged

    medium

    IL PAR 90+ Increase

    Analyst pointed out an increase in IL PAR 90+, which management attributed to specific issues in Karnataka, but expressed overall comfort with the IL portfolio. — Analyst acknowledged

    medium

    Q&A highlights

    8

    “So, Rajiv, it is being actively considered by the Reserve Bank of India and we have to just wait for their decision. That is all I can say. We would expect it to happen as quickly as possible. The decision that is.”

    Analyst sought clarity on the timeline and any pushback for the Universal Banking License, but management provided a non-committal response, indicating uncertainty.

    asked by Rajiv Mehta

    2 min read6 chapters

    Detailed Narrative

    01

    Robust Growth in Deposits and Loan Book

    Ujjivan Small Finance Bank demonstrated strong performance in Q3 FY26, with deposits growing by 7.7% QoQ and 22.4% YoY to reach Rs. 42,223 crores. The Gross Loan Book (GLB) also expanded significantly, increasing by 7.1% QoQ and 21.6% YoY to Rs. 37,057 crores. This growth was fueled by the highest-ever quarterly disbursements, totaling Rs. 8,293 crores, reflecting broad-based performance across both unsecured and secured product categories.

    02

    Improved Profitability and Margin Expansion

    The bank achieved a Net Interest Income (NII) of Rs. 1,000 crore, marking a 12.8% YoY and 8.5% QoQ growth, which is the highest ever reported. Net Interest Margin (NIM) was sequentially higher at 8.2%, benefiting from a lower cost of funds, which decreased by 26 bps QoQ to 7.08%. Profit After Tax (PAT) stood at Rs. 186 crore, translating to a Return on Assets (ROA) of 1.5% and Return on Equity (ROE) of 11.5%, indicating strong improvement in profitability.

    03

    Positive Asset Quality Trends and Provisioning

    Asset quality showed favorable trends, with Portfolio At Risk (PAR) improving to below 4% and Gross Non-Performing Assets (GNPA) at 2.4% as of December 2025. Slippages moderated to Rs. 221 crores and write-offs to Rs. 126 crores. The Provision Coverage Ratio (PCR) increased by 3% QoQ to 76%, reflecting positive signs in provision requirements, with credit cost for the quarter at Rs. 195 crores, including Rs. 9 crores of accelerated provision.

    04

    Strategic Diversification of Loan Portfolio

    The bank continued its strategy of diversifying its loan book. Micro-banking disbursements grew 62.4% YoY to Rs. 4,688 crores. The secured portfolio's share is growing, with Affordable Housing GLB up 40.3% YoY to Rs. 8,231 crores, Micro Mortgage GLB more than doubling YoY to Rs. 1,329 crores, and MSME GLB growing 69.1% YoY to Rs. 2,865 crores. Gold loans scaled 5-fold YoY to Rs. 557 crores, and Agri loans grew 212% YoY to Rs. 607 crores.

    05

    Strengthening CASA Franchise and Branch Network

    CASA mobilization remained a key focus, with the CASA percentage staying above 27% for two consecutive quarters. The bank expanded its geographic footprint by adding 11 branches during the quarter, bringing the total branch network to 777 and completing the planned additions for FY26. Management aims to further increase the CASA percentage towards 35% by FY30.

    06

    Operational Efficiency and Future Outlook

    The cost to income ratio was 66%, though it would drop below 65% when adjusted for a one-off📎 Rs. 18 crore gratuity impact. Management anticipates credit cost normalization by Q2 FY27 and targets an ROA of 1.8%-2% by FY30. The bank also welcomed Mr. Aniruddha Paul as an Independent Director, whose expertise is expected to support its growth trajectory and digital transformation initiatives.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.