Ujjivan SFB is much better poised to start its outward journey from the current cycle. Normalization of growth and credit cost is expected to start from Q1 FY26 and the full year outcomes would likely be much better than FY25.
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Yes Securities Report
Ujjivan Small Finance Bank Ltd.'s pre-provision operating profit/PAT in Q3 FY25 were 10%/28% below our estimate owing to a material contraction in NIM, lower other income and higher credit cost. Gross loan book was flat sequentially, representing sharp decline in Group Loans, no growth in Individual Loans and strong growth in Secured products of Affordable HL, MSME and FIG.
The shift towards Secured products has accelerated in recent quarters with their contribution rising from 31% in June to 35% in Sept to 39% in Dec. Besides this, slight increase in deposit cost, higher interest reversals from higher GL & IL slippages and portfolio yield decline across Secured products drove the contraction in bank's NIM.
Overall other income in the quarter was impacted by lower processing fees and insurance income (both connected with moderate disbursements) and full provisioning on SRs created from the ARC sale done.
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