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Key Points
We hosted the management of Ujjivan Small Finance Bank Ltd. during our special event - virtual Financial Services Day held on September 26, 2023.
The management maintained its FY24 guidance on key metrics: loan growth - 25-30%, return on equity - 22% plus, net interest margin - 9%, cost-to-income ratio in similar range of 55% seen in FY23 and credit cost within 100 basis points before it normalises in future. The management's core focus is on growing the secured book faster, with a major part of it being led by housing loans and loan against property.
On the unsecured side, the share of individual micro finance Institutions book is expected to increase in line with global trends in the MFI industry. Recently launched gold loans and vehicle loans should contribute meaningfully to the overall loan book FY26 onwards. The micro small and medium enterprises book, which is currently under transition, is expected to stabilise by FY24-end and should start growing FY25 onwards.
On the liability side, it remains committed to grow its current account savings account book. Ujjivan Small Finance Bank is also exploring cross-selling opportunities, which will be return on assets accretive in the long term.
The reverse merger process of Ujjivan Financial Services Ltd. with Ujjivan Small Finance Bank should be completed before the end of March 2024.
As the tenure of present Managing Director and Chief Executive Officer Mr. Ittira Davis ends in January 2025, the bank is in the process of identifying internal as well as external candidates. It expects to have enough handholding time between the present MD and CEO and his successor.
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