Ujjivan SFB posts record net profit of Rs 203 cr in Q1 on fall in bad loans

Ujjivan Small Finance Bank reported its highest-ever quarterly profit in June 2022 quarter at Rs 203 crore on higher interest income, fall in bad loans as well as strong loan disbursement.

The Bengaluru-based Small Finance Bank (SFB) had posted a net loss of Rs 233 crore in the same quarter a year ago. Compared sequentially, the net profit was up by 60.4 per cent from Rs 126.52 crore in quarter ended March 2022.

This is the highest-ever quarterly net profit, the bank said, adding there is continued traction on collections side at about 99 per cent.

Bank's total income during April-June period of 2022-23 rose by 40 per cent to Rs 1,000.42 crore, as against Rs 714.67 crore in same quarter of 2021-22, Ujjivan SFB said in a regulatory filing.

The interest earned by the lender jumped by 41.1 per cent to Rs 905.37 crore in Q1 FY23 as against Rs 641.66 crore in Q1FY22. While other income grew to Rs 95.1 crore as against Rs 73 crore.

Net interest income -- interest earned minus interest expended -- rose by 56 per cent from a year ago to Rs 600 crore during the quarter.

There was significant reduction in bad loan proportion as the bank cut down the gross Non-Performing Assets (NPAs) to 6.51 per cent of the gross advances by end of Q1 FY23 from 9.79 per cent in the year-ago period.

In absolute value, the gross NPAs or bad loans stood at Rs 1,146.71 crore as against Rs 1,374.98 crore recorded at the end of June 2021.

Net NPAs shrank to 0.11 per cent (equivalent to Rs 17.80 crore) from 2.68 per cent (Rs 348.73 crore).

This aided in substantial reduction in provisioning and contingencies requirement for June 2022 quarter to Rs 39 lakh (Rs 0.39 crore) as against Rs 473.21 crore in the first quarter of FY22.

Ujjivan SFB said the June quarter witnessed strongest disbursement in bank's history at Rs 4,326 crore, up by 230 per cent from a year ago period. Deposits rose by 35 per cent from a year ago to Rs 18,449 crore.

Of this, retail deposits jumped by 65 per cent to Rs 10,761 crore.

The bank said it is building up new customer acquisition with 34 per cent of the loans to new customers, up from 24 per cent in Q4 FY22. It also acquired 1.9 lakh new customers in Q1 FY23. It stood at 1.5 lakh in Q4 FY22.

"On disbursement side, it was strongest-ever first quarter reaffirming strong credit demand. Our deposit book continues strong growth, up 35 per cent year-on-year. Retail deposits and CASA contribute to 58 per cent and 28 per cent of total deposit," Ittira Davis, MD & CEO, Ujjivan Small Finance Bank, said.

Besides, the PAR (Provision Against Restructuring) continues to improve, currently at 7.9 per cent versus 9.6 per cent as on March 2022.

"This is largely due to normalisation of slippages and strong focus on collections. We continue to hold strong provisioning buffers on our books with PCR (Provision Coverage Ratio) at 98 per cent, resulting into NNPA of mere 0.1 per cent. Our strategy to build granular liability base will remain our prime focus going ahead along with enhancing our digital capabilities which is resulting in improved business and productivity levels," Davis said.

Ujjivan SFB said it is diversifying its other income sources and will ramp up current line of products over the medium term. These include insurance products of life, general, health segment as well as relevant benefits for target segments.

Stock of the bank closed at Rs 19.10 apiece on BSE on Tuesday, up 9.77 per cent from previous close.