1. Asset quality problem: Samit Ghosh says Ujjivan hopes to fix issue in 6 months

Asset quality problem: Samit Ghosh says Ujjivan hopes to fix issue in 6 months

During the fourth quarter of the last financial year, the Bengaluru-based NBFC's asset quality and business growth were impacted due to the note ban.

By: | New Delhi | Published: April 29, 2017 4:19 AM
During the March quarter, the company’s consolidated net profit fell close to 65% year-on-year to `19.35 crore, while its net interest income (NII) declined by 15.53% to Rs 128.31 crore.

Ujjivan Financial Services, the promoter of Ujjivan Small Finance Bank (SFB), on Friday said it is hopeful that within six months the NBFC would be able to recover from the asset quality problem, although it would have to write off “a certain amount” of bad loans due to the demonetisation.
During the fourth quarter of the last financial year, the Bengaluru-based NBFC’s asset quality and business growth were impacted due to the note ban. Ujjivan commenced its SFB operations from
February 1.

During the March quarter, the company’s consolidated net profit fell close to 65% year-on-year to Rs 19.35 crore, while its net interest income (NII) declined by 15.53% to Rs 128.31 crore. During the period, the net interest margin (NIM) decreased to 8.61% from 12.65 % in the year-ago period as
both disbursement and loan repayments were impacted.

“From March, there has been a significant turnaround for the entire industry in terms of loan recovery, also loan disbursements have picked up. Our overdues came down significantly, and the loan disbursement have come back to almost the normal level we had during the pre-demonetisation period. We of course are not in all the segments of geographical areas which have been affected due to demonetisation,” said Samit Ghosh, founder of Ujjivan, and MD & CEO of Ujjivan SFB.

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Ghosh was in Kolkata to launch the banking operations in the city with six branches. “Our loan portfolio did not fall to as much as it could have fallen. We also took active measures to manage our loan recoveries. We are continuously seeing improvement in that, so we are very hopeful that within six months we would be able to recover from the portfolio quality problem. However, I think there will be a certain amount which will have to be written off. And we have made some provisions, but we will get a better idea in the next two months as to how much exactly we have to write off additionally,” Ghosh said.

“If we eliminate November and December months’ loan outstandings, our GNPA numbers are very, very good. So, the portfolio quality for the rest continues to be good. But if you include November and December for post demonetisation impact, our GNPA is about 3.7%,” he said, adding that the company stopped acquiring new customers from November last year in areas where repayment rates are less than 90%. At the end of the previous fiscal, GNPA stood at 0.28% of its total loans.
On small finance bank, Ghosh said in less than three months of the launch, it has established presence across all four regions of the country. In coming months, it would continue to expand footprints. The bank is targeting a deposit base of `2,500 crore and a loan book of about `1,700 crore for the current financial year.

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