Ujjivan SFB Q2: PAT at ₹294 cr on strong growth; stock hits new 52-week high

Bangalore-based Ujjivan Small Finance Bank recorded strong growth in profitability during the quarter ending September 30, 2022 (Q2FY23). It garnered a PAT of ₹294.29 crore in Q2FY23, registering a growth of 45.01% as against a PAT of ₹202.94 crore in Q1FY23. The SFB witnessed a net loss of ₹273.79 crore in Q2 of the previous fiscal. Overall, Ujjivan saw strong growth across parameters in Q2FY23. On the back of impressive Q2, Ujjivan SFB shares soared to touch a new 1-year high. 

The top-line front of the SFB was also robust. The net interest income (NII) stood at ₹663.24 crore in Q2FY23 -- rising by a whopping 69.47% from ₹391.36 crore posted a year ago same quarter. NII jumped by 10.59% from ₹599.71 crore in Q1FY23.

Net interest margin (NIM) came in at 9.8% in Q2FY23 expanding from 8.1% in Q2FY22.

Ujjivan SFB continued to hold strong provisioning buffers on its books, while its deposits growth performed well. The bank's disbursement sustained over the ₹4,000 mark. Further, asset quality also continued to improve.

In Q1FY23, Ujjivan SFB's gross advances stood at ₹20,938 crore up by 44% yoy, while deposits rose by 45% yoy to ₹20,396 crore. Disbursements were strong at ₹4,866 crore higher by 56% yoy.

Ittira Davis, MD & CEO, Ujjivan Small Finance Bank said, "Q2FY23 is another milestone quarter with record profitability. While disbursements continue to sustain the ₹4,000+ crore mark, deposit growth took-off well this quarter driven by retail deposits. Our loan book grew 8% vs Jun’22 / 44% vs Sep’21 to ₹20,938 crore and deposits are up 11% vs Jun’22 / 45% vs Sep’21. Retail deposits and CASA contribute to 61% and 26.9% of total deposit."

Further, Davis said, PAR continues to improve, currently at 6.1%* vs. 7.9% as on Jun’22. This is largely due to sustained collection efficiency at pre-covid levels and normalised slippages; while recoveries continue to be strong.

Also, as of September 30, 2022, the SFB's total provision on books was at ₹1,126 crore ---- of which --- ₹115 crore was a standard provision, ₹762 crore for account level NPA, and ₹250 crore are floating provision.

According to the SFB, the entire floating provision of ₹250 crore created in Jun’21 continues to be there on books and can be utilized for making specific provisions in extraordinary circumstances with prior approval of RBI.

Further, it highlighted that, only ₹160 crore is utilized for NNPA/ PCR calculation, ₹30 crore towards Tier II capital, and the balance ₹60 crore has been grouped as part of other provisions without utilizing the same towards Tier II capital, this amount continues to be earmarked for utilization for NNPA/PCR as and when needed.

Davis added, "We continue to hold strong provisioning buffers on our books with PCR at 99%, resulting into NNPA of mere 0.04%."

In Q2FY23, the SFB posted a gross NPA of 4.4% -- declining sharply from 5.9% in Q1FY23. While net NPA stood at 0.04% in Q2FY23 versus 0.01% in Q2FY22.

Going forward, Davis said, "We remain focused on building granular deposit franchise and continuously enhance digital capabilities to drive improved business and productivity levels. With recent capital raise and sustained high profitability, Sep’22 CRAR is far more than comfortable to capitalise on opportunities ahead.”

Ujjivan SFB shares on Monday traded at ₹28.10 apiece up by 5.05% at around 2.36 pm on BSE. The shares hit a new 52-week high of ₹30.50 apiece earlier in the day.