Ujjivan Small Finance Bank has reported a significant decline in its profit for the first quarter of the fiscal year. The bank’s profit plummeted to Rs 103 crore, marking a substantial drop from the previous year’s figures. This decline can be attributed to various factors, including an increase in provisioning for bad loans and a rise in operating expenses.
The bank’s net interest income (NII) also witnessed a decline, standing at Rs 544 crore, as compared to Rs 608 crore in the corresponding quarter of the previous year. This decrease in NII can be attributed to the bank’s efforts to restructure its loan portfolio and focus on high-quality assets.
Ujjivan Small Finance Bank’s gross non-performing assets (NPAs) also saw a rise, standing at 6.4% of the total loans, as compared to 4.4% in the previous quarter. This increase in NPAs has resulted in higher provisioning requirements, which have negatively impacted the bank’s profitability.
The bank’s operating expenses also increased, primarily due to higher employee benefits and other operating expenses. The operating expenses for the quarter stood at Rs 444 crore, as compared to Rs 394 crore in the corresponding quarter of the previous year.
Despite the decline in profit, Ujjivan Small Finance Bank’s management remains optimistic about the bank’s future prospects. The bank is focusing on improving its asset quality, reducing its cost of funds, and increasing its fee income. The management is also working on expanding the bank’s distribution network and enhancing its digital capabilities to improve customer convenience and increase business growth.
In terms of deposits, Ujjivan Small Finance Bank witnessed a growth of 24% year-on-year, with total deposits standing at Rs 17,444 crore. The bank’s CASA (current account and savings account) ratio also improved, standing at 24.3%, as compared to 20.4% in the previous quarter.
Overall, while Ujjivan Small Finance Bank’s Q1 results were disappointing, the bank’s management is taking steps to address the challenges and improve its performance. The bank’s focus on asset quality, cost reduction, and business growth is expected to yield positive results in the coming quarters. However, the bank will need to continue to monitor its NPAs and provisioning requirements closely to ensure a turnaround in its profitability.