Ujjivan Small Finance Bank Q1FY26 Net Profit Decline 65.7% YOY; Share Falls by 3.02%

Bengaluru, July 24, 2025 – Ujjivan Small Finance Bank Ltd (NSE: UJJIVANSFB, BSE: 542904) reported a substantial  65.7%  year-on-year decline in its standalone net profit for the first quarter ended June 30, 2025. Two of the most critical factors for this performance include lower interest income and an increase in GNPA (Gross Non-Performing Assets).

This led to a fall in the bank’s share by almost 3%. The stock closed at ₹45.60 (3.02% lower than the previous day’s closing price). The high-low range during the day remained between ₹45.02 and ₹47.29. The traded volume was quite high (1.82 crore shares traded at a total value of ₹83.26 crore). The company’s P/E ratio is 12.54 compared to the sectoral average of 14.57.

Financial Performance Highlights

In Q1FY26, the company’s total income rose 5.3% YoY to ₹1,867.83 crore, aided by a 2.6% rise in interest earned and 26.3% growth in other income. However, operating profit fell 29.3% YoY to ₹360.48 crore. Provisions surged 104.7% YoY, impacting profitability. Consequently, net profit declined 65.7% YoY to ₹103.22 crore, though it improved 23.8% QoQ, indicating a partial recovery from the previous quarter’s performance.

Key Ratios and Asset Quality

Net interest income remained strong at ₹1,618.84 crore, aided by healthy retail disbursements, though other income dropped 7.7% QoQ. Total expenditure rose 19.2% YoY due to higher interest and operating expenses, narrowing operating margins. The increase in bad loans (Gross and Net NPA) is considerable as the absolute increase is quite high (34 basis points on a quarter-to-quarter basis).

Segment-Wise Performance

Retail banking continued to dominate income and profitability, while treasury income rose 13% sequentially. However, asset quality deteriorated with Gross NPAs rising from ₹13.8 crore to ₹834.35 crore QoQ.

Strategic and Regulatory Developments

• Universal Bank License: The bank has applied for a Universal Banking License with RBI on February 4, 2025.
• ESOP Activity: 3.43 lakh equity shares were allotted in Q1 FY26 under the ESOP 2019.
• Floating Provisions: Total floating provisions stood at ₹180.67 crore, of which ₹130 crore was considered for Net NPA and PCR. Adjusted Net NPA would be 0.63% and PCR 75.38% if full floating provision were utilized.
• Digital Banking Unit: Awaiting DBU Working Group decision before segmental reporting is initiated.

Management Commentary

Sanjeev Nautiyal, MD & CEO, stated: “We are pleased with the sequential improvement in profitability driven by treasury and retail growth. Our capital position remains strong at 22.77% and we continue to invest in digital and structural transformation in line with our long-term goal of becoming a universal bank.”

Outlook

Despite muted YoY profitability due to higher provisions and a spike in NPAs, the bank maintains a robust balance sheet and capital buffer. Investors will closely monitor asset quality and the RBI’s response to its application for a Universal Banking License.

About Ujjivan Small Finance Bank

Ujjivan SFB is a listed small finance bank headquartered in Bengaluru, focused on financial inclusion and serving the underbanked through retail, microbanking, and affordable housing products.

REF:https://nsearchives.nseindia.com/corporate/UJJIVANBANK_24072025133955_50_Board_Meeting_Outcome_FR_Q1_24072025_Final.pdf

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