Mumbai: Ujjivan Financial Services Ltd, the holding company of Ujjivan Small Finance Bank, reported a 64.76% decline in net profit for the fourth quarter due to slowdown in disbursements and higher finance costs and employee expense.
The net profit for the March quarter fell to Rs19.35 crore compared to Rs54.91 crore a year ago.
Disbursement for the fourth quarter was Rs1,406.95 crore, a 32.68% decrease over the year-ago period.
Finance costs escalated by 37.09% to Rs161.70 crore at the end of March compared to Rs117.95 crore a year ago. Employee expenses were at Rs76.54 crore at the end of the fourth quarter, a 42.29% increase over the previous year figures.
Sudha Suresh, managing director and chief executive officer of Ujjivan Financial Services, assured availability of cash reserve ratio and statutory liquidity ratio led to increase in finance cost. Since the small finance bank came into operations from 1 February, additional branch staff which got deployed across various spaces assisted in increasing employee cost.
Provisions for the March quarter fell to Rs7.17 crore from Rs54.75 crore in the previous quarter.
“Post demonetisation, we were not sure that how long will it take for collections to regularize…we thought it prudent and conservative to provide higher provisions as of December. Looking at collections trends in fourth quarter which improved substantially, therefore we took re-assessment,” said Suresh.
Ujjivan Small Finance Bank intends to convert 171 existing micro-finance branches into bank branches. Also 53 unbanked rural centres will be opened by year-end.
At 2pm, Ujjivan Financial Services Ltd was trading at Rs385.10 on BSE, down 4.5% from its previous close, while India’s benchmark Sensex index fell 0.31% to 29,936.30 points.