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    Ujjivan Small

    UJJIVANSFB
    Financial Services·8 May 2026
    Management Summary

    Ujjivan Small Finance Bank delivered a strong Q4 FY26, marked by robust growth in its gross loan book and deposits, alongside an improved NIM of 8.5%. The bank is actively diversifying its portfolio towards secured assets, which now constitute 49.4% of the book. While asset quality remains stable with an 81% PCR, the bank's FY27 ROA guidance of 1.6% reflects planned significant investments in digital, branches, and technology, as well as a conservative approach to future eventualities.

    Highlights

    6

    • Gross Loan Book reached INR40,655 crores, growing 26.6% Y-o-Y and 9.7% Q-o-Q.

    • Total deposits stood at INR45,668 crores, reflecting Y-o-Y growth of 21.4% and 8.2% Q-o-Q.

    • Net Interest Income (NII) grew 26.4% Y-o-Y and 9.2% Q-o-Q to INR1,092 crores.

    • Net Interest Margin (NIM) for Q4 improved further to 8.5%.

    • Secured portfolio now contributes 49.4% of the overall book, up from 43.5% Y-o-Y.

    • Provision Coverage Ratio (PCR) improved to 81%, providing an adequate buffer.

    Concerns

    2

    • ROA guidance for FY27 is 1.6%, lower than the Q4 FY26 exit ROA of 2.1%, primarily due to planned investments and conservative provisioning.

    • Micro banking growth is guided at less than 10% (higher single-digit) for FY27, which is lower than the overall advances growth target of 25%.

    Key financials

    Metrics

    10

    Periods

    2

    Headline

    7
    • Gross Loan Book
      ₹40,655 Cr
      YoY+26.6%QoQ+9.7%
    • Total Deposits
      ₹45,668 Cr
      YoY+21.4%QoQ+8.2%
    • Net Interest Income (NII)
      ₹1,092 Cr
      YoY+26.4%QoQ+9.2%
    • Net Interest Margin (NIM)
      8.5%
    • Gross NPA
      2.3%

    FY26

    3
    • ROA
      1.4%
    • ROE
      10.9%
    • Credit Cost
      2.2%
      YoY-0.2%

    Guidance & targets

    11
    CategoryTargetPriority
    Growth
    Advances Growth
    ~25%
    		High
    Profitability
    ROA
    ~1.6%
    		High
    Profitability
    NIM
    ~8.5%
    		High
    Credit Quality
    Credit Cost
    1.4% to 1.5%
    		High
    Capital
    Equity Capital Raise
    Not exceeding INR2,000 crores
    		High
    Segment Growth
    Micro Banking Growth
    <10% (higher single-digit)
    		High
    Segment Mix
    Secured Portfolio Share
    a little upwards of 56%
    		High
    Efficiency
    Cost-to-Income Ratio
    same percentages as FY25/FY26
    		High
    Efficiency
    Opex to ATA
    20-30 bps above FY26
    		High
    Deposits
    CASA Ratio
    around 30%
    		Medium
    Distribution
    Branch Additions
    ~140 branches
    		High

    ROA trajectory

    Next quarter (Q1 FY27)
    CurrentQ4 FY26 exit ROA 2.1%, FY27 guidance 1.6%
    TargetCloser to 1.6% as guided, with clarity on impact of investments

    Why it matters

    To verify if the ROA compression due to investments and conservative provisioning materializes as guided, and if the offsetting factors (cost of funds, asset quality) are sufficient.

    Guidance FY27... ROA: ~1.6%. ... We do appreciate that there are certain dynamics, which may play out on a couple of our key products, and covering for eventualities is where you're seeing the ROA at the guide level.

    How to verify

    key_financials.metrics[label='ROA']

    Risks & concerns

    1
    RiskSeverity

    Geopolitical tensions and their impact on GDP/inflation

    Real GDP growth for FY26-27 expected at 6.9% faces downside risks from geopolitical tensions, oil price volatility, supply chain disruptions, and the super El Niño weather phenomenon, fueling inflation. However, the bank's portfolio is overwhelmingly domestic, granular, and retail, making it insulated from first-order geopolitical disruptions. — Management acknowledged

    medium

    Q&A highlights

    6

    “So I think, Digant, as I said, we would be entailing investments on the lines that I indicated, which is on tech, digital, AI, and branch expansion. So all these expenses or investments would actually lead to an ROA, which I indicated.”

    Analysts questioned the significant drop in ROA guidance (2.1% exit vs. 1.6% guided) despite stable NIM, prompting management to clarify it's due to planned investments and conservative provisioning.

    asked by Digant Haria

    3 min read7 chapters

    Detailed Narrative

    01

    Strong Financial Performance in Q4 FY26

    Ujjivan Small Finance Bank delivered robust financial results in Q4 FY26, with its gross loan book expanding by 26.6% year-on-year to INR40,655 crores and total deposits growing 21.4% year-on-year to INR45,668 crores. Net Interest Income (NII) saw a significant increase of 26.4% year-on-year, reaching INR1,092 crores, contributing to an improved Net Interest Margin (NIM) of 8.5% for the quarter. The bank's exit quarter PAT stood at INR282 crores, with an ROA of 2.1% and ROE of 17.2%.

    02

    Strategic Portfolio Diversification and Growth

    The bank continued its strategic shift towards a more balanced and diversified loan portfolio, with the secured segment growing to 49.4% of the total book, up from 43.5% year-on-year. Disbursements in Q4 FY26 were the highest ever at INR9,811 crores, marking a 32.1% year-on-year increase. Newer business lines like gold loans, vehicle finance, and agri banking demonstrated exceptional growth, increasing by 292%, 102%, and 127% year-on-year respectively, now contributing approximately 6% to the loan mix.

    03

    Stable Asset Quality and Provisioning

    Asset quality remained robust, with the Gross Non-Performing Assets (GNPA) at 2.27% in Q4 FY26, showing sequential moderation. The Provision Coverage Ratio (PCR) improved to 81%, providing an adequate buffer. Credit cost for the full financial year 2026 stood at 2.2% of the average gross loan book, a 20 basis points reduction year-on-year, reflecting effective collection efforts and improving borrower behavior.

    04

    Deposit Franchise Strengthening

    The bank maintained strong momentum in deposit growth, with CASA deposits improving to a ratio of 28.6%. Retail TD plus CASA accounted for 70% of total deposits, amounting to INR31,995 crores. The cost of funds for the quarter was 7%, and 7.2% for the full year, with management expecting a further 25-30 basis points reduction in SA cost of funds due to recent rate changes.

    05

    FY27 Outlook and Investment Focus

    For FY27, Ujjivan Small Finance Bank targets approximately 25% advances growth and an ROA of around 1.6%. This ROA guidance is lower than the Q4 exit ROA of 2.1% due to significant planned investments in digital infrastructure, AI, branch expansion (approximately 140 new branches), and technology. The bank's Board has also approved raising equity capital not exceeding INR2,000 crores in the second half of FY27 to support this growth.

    06

    Universal Banking Aspirations and Regulatory Engagement

    The bank's application for voluntary transition to a universal bank was returned by the RBI, with the regulator acknowledging Ujjivan's efforts towards loan portfolio diversification. The bank intends to continue engaging with the RBI and reapply at an appropriate time⏳, focusing on further strengthening its secured portfolio, which is projected to be 'a little upwards of 56%' for FY27. This strategic direction is key to meeting future regulatory expectations.

    07

    Operational Efficiency and Liquidity Management

    The cost-to-income ratio for FY26 was 65.6%, and Opex to ATA stood at 6.4%. The bank aims to maintain its cost-to-income ratio at similar levels in FY27 despite investments, with Opex to ATA expected to be 20-30 bps above FY26 due to these investments, then decreasing. Liquidity remains comfortable, with a CD ratio of 89% and an LCR of 142% as of March 31, 2026. Management indicated no immediate stress on the deposit side and expects to maintain growth in line with credit expansion.

    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.