Ujjivan Small Finance Bank posted a net profit of Rs 203 crore in the three months ended June 30 as against a net loss of Rs 233 crore in the same period last year. According to the lender, this is the highest-ever profit declared by it. Its provisions fell to Rs 39 lakh in Q1FY23 from Rs 473 crore in the previous year.
The bank reported 68% year-on-year (y-o-y) increase in pre-provisioning operating profit to Rs 271 crore. Net interest income (NII) stood at Rs 600 crore in the quarter under review, up 56% on- year aided by healthy loan growth and lower cost of funds. This led to higher net interest margin (NIM) at 9.6% as on June 30, higher by 16 basis points (bps) in the last year.
On asset quality front, gross non-performing asset (NPA) ratio declined to 5.9% as on June 30 from 7.1% in the previous quarter while net NPA ratio declined to 0.1% in the same period from 0.6% a quarter ago. The bank wrote-off bad loans of Rs 79 crore and has reduced its restructured book, constituting 3.4% of gross advances. Provision coverage ratio stood at 98% as on June 30.
“Ujjivan seems to be overcoming the twin challenges of Covid-induced asset quality and the management change after CEO exit. The bank is now better positioned to turn a corner and refocus itself on loan growth,” Kotak Institutional Equities said in a note.
The brokerage estimates credit costs of 1.6% for FY23 to account for slippages in the near term from the non-NPL stress book.
“We disbursed Rs 4,326 crore improving our loan book to Rs 19,409 crore, up by 38% y-o-y. Portfolio at risk (PAR) continues to improve, currently at 7.9% vs 9.6% as on Mar’22. This is largely due to normalisation of slippages and strong focus on collections,” Ittira Davis, managing director and chief executive officer of the bank, said.
“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,” he added.