Ujjivan Small Finance Bank Takes 91% Haircut On Rs 364 Crore Bad Loan Sale

Ujjivan Small Finance Bank Ltd. on Friday completed the sale of its non-performing assets and written-off loans worth Rs 364.51 crore to an asset reconstruction company, or ARC.

The lender sold its NPA and written-off loans to the ARC for a cash consideration of Rs 34.26 crore, according to an exchange filing on Friday. Earlier on Feb. 21, the board of the bank approved the sale of its NPA and written-off loans.

The bank reported a 64% year-over-year decline in profit to Rs 109 crore for the three months ended December, mainly due to increased provisions.

Quarter-on-quarter, the bank's bottom line fell by 53%. Provisions and contingencies surged to Rs 223 crore, significantly higher than the Rs 63 crore recorded a year ago.

A slight rise in net interest income saw it capped at Rs 887 crore, marking a 3% annual increase. However, the net interest margin declined to 8.6% in the October-December period from 9.2% in the previous quarter and 8.8% a year ago.

Shares of Ujjivan Small Finance Bank on Friday closed 1.50% lower at Rs 32.13 apiece on the National Stock Exchange, compared to a 1.86% fall in the benchmark Nifty 50. The stock has fallen by 37.18% in the last 12 months.

Fourteen out of the 16 analysts tracking the company have a 'buy' rating on the stock, one recommends 'hold,' and one suggests 'sell,' according to Bloomberg data. The average of 12-month analysts' price targets implies a potential upside of 40.1%.