Ujjivan Small Finance Bank, one of India’s largest small finance banks, has announced its financial results for the first quarter of the current financial year (Q1 FY23). The bank reported a profit after tax (PAT) of Rs 301 crore, a 7% decline from the same period last year.
The bank’s total income for the quarter stood at Rs 1,248 crore, a 14% increase from the corresponding period last year. The decline in PAT is attributed to an increase in operating expenses, which rose 20% year-on-year (YoY) to Rs 541 crore. This is partly due to higher interest expenses and employee costs.
However, the bank’s net interest income (NII) saw a 21% YoY growth, rising to Rs 721 crore. The NII growth was driven by a 14% increase in interest income and a 6% increase in interest expenses.
The bank’s asset quality has deteriorated marginally, with gross non-performing assets (NPAs) rising to 7.4% of the total assets, up 40 basis points from the same period last year. However, the net NPAs remained stable at 2.4%.
Ujjivan Small Finance Bank’s capital adequacy ratio (CAR) was 23.4%, exceeding the Reserve Bank of India’s (RBI’s) regulatory requirement of 15%. The bank’s high CAR provides it with the necessary cushion to withstand potential asset quality stress.
Key takeaways from the Q1 results of Ujjivan Small Finance Bank are:
* PAT decreased 7% YoY to Rs 301 crore
* Total income increased 14% YoY to Rs 1,248 crore
* Net interest income (NII) grew 21% YoY to Rs 721 crore
* Gross NPA ratio rose 40 basis points to 7.4%
* Net NPA ratio remained stable at 2.4%
* Capital adequacy ratio (CAR) was 23.4%, above RBI’s regulatory requirement
Overall, while the bank’s Q1 results were impacted by the rising operating expenses, the strong NII growth and stable asset quality are demonstrating its ability to navigate the challenging macroeconomic environment.