What Caused Ujjivan Small Finance Bank's 74.7% Net Profit Drop in Q4?
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Synopsis
Ujjivan Small Finance Bank sees a dramatic 74.7% drop in net profit due to increased provisioning and interest income slowdowns. Despite this, the bank shows improvements in asset quality and significant YoY growth in deposits. Discover more about their financial performance and strategic shifts in this in-depth report.
Key Takeaways
- Net Profit Drop: 74.7% decline to Rs 83.4 crore.
- NII Decrease: Down 7.4% to Rs 864.4 crore.
- Asset Quality Improvement: GNPA at 2.18%.
- Deposit Growth: Total deposits up 20% YoY.
- Record Loan Disbursement: Rs 7,440 crore in Q4.
Mumbai, April 30 (NationPress) Ujjivan Small Finance Bank (SFB) has announced a significant 74.7% decline in net profit, reporting Rs 83.4 crore for the fourth quarter (Q4) of FY25, a stark contrast to Rs 329.6 crore in the same quarter last fiscal year.
This downturn is largely attributed to heightened provisioning and a reduction in interest income, influenced by shifts in the bank’s business strategy.
For the fourth quarter, Ujjivan SFB recorded a Net Interest Income (NII) of Rs 864.4 crore, reflecting a 7.4% decrease from Rs 933.5 crore during the previous year’s corresponding period.
Nevertheless, the bank’s asset quality demonstrated progress on a quarter-on-quarter (QoQ) basis, according to its stock exchange disclosures.
The Gross Non-Performing Assets (GNPA) fell to 2.18% from 2.68% in the preceding quarter, while the Net NPA improved to 0.49% from 0.56%.
The bank’s Provision Coverage Ratio (PCR) remained robust at 78%, supported by an accelerated provisioning of Rs 46 crore during the quarter.
PCR serves as a crucial financial metric for banks, indicating their capacity to manage potential losses stemming from non-performing loans.
In addition, Ujjivan SFB experienced strong growth in deposits, with total deposits climbing by 20% year-on-year (YoY), reaching Rs 37,630 crore.
The bank also saw a notable increase in its CASA (Current Account Savings Account) ratio, which improved to 25.5%, reflecting a rise of 43 basis points from the previous quarter.
The gross loan portfolio expanded to Rs 32,122 crore—a 5% increase from the last quarter and an 8% rise compared to the same period last fiscal year.
A significant highlight for the bank was the surge in its secured loan portfolio, which now represents 44% of the total loan book, up from 30% a year ago.
Ujjivan SFB also achieved record loan disbursements, with Rs 7,440 crore disbursed in Q4—marking a 39% QoQ growth. This growth was driven by a strong performance in the micro-banking and individual loan sectors.
Following the announcement of these results, shares of the small finance bank fell by over 3% to Rs 42.56 on the National Stock Exchange (NSE) on Wednesday.
Point of View
I believe Ujjivan SFB's recent performance reflects the broader challenges faced by financial institutions in today's economic climate. While the drop in net profit is concerning, the improvements in asset quality and deposit growth indicate resilience and strategic adjustments that could foster future growth. NationPress will continue to monitor the bank's developments closely.
NationPress
27/06/2025
Frequently Asked Questions
What caused the drop in Ujjivan SFB's net profit?
The significant drop in Ujjivan SFB's net profit was primarily due to increased provisioning and a slowdown in interest income.
How much did Ujjivan SFB's NII decrease?
Ujjivan SFB's Net Interest Income (NII) decreased by 7.4%, from Rs 933.5 crore to Rs 864.4 crore.
What improvements were seen in asset quality?
The Gross Non-Performing Assets (GNPA) improved to 2.18% from 2.68%, and the Net NPA decreased to 0.49% from 0.56%.
How much did Ujjivan SFB's total deposits increase?
Total deposits rose by 20% year-on-year, reaching Rs 37,630 crore.
What was significant about the bank's loan disbursement in Q4?
Ujjivan SFB achieved record loan disbursements of Rs 7,440 crore in Q4, reflecting a 39% quarter-on-quarter growth.
