Ujjivan SFB Q4 - Growth Not A Challenge, Seamless Management Transition A Key Monitorable: Axis Securities

Axis Securities Report

Ujjivan Small Finance Bank Ltd.'s disbursements grew by 11/18% YoY/QoQ, driven by a strong growth in the non-MFI segments disbursements (+63/29% YoY/QoQ), while MFI disbursements remained flat YoY and grew by 14% QoQ.

Advances grew by 24/7% YoY/QoQ with the share of the secured portfolio improving to 30.2% versus 28.4% QoQ. Deposits grew by 23/6% YoY/QoQ, primarily driven by current account and savings account deposits (+24/10% YoY/QoQ), while TDs grew by 23/4% YoY/QoQ.

CASA Ratio improved to 26.5% versus 26.4/25.3% YoY/QoQ.

Financial Performance-

NII grew by 26/9% YoY/QoQ led by healthy advances growth and margin expansion of 60bps QoQ. The bank witnessed improvement in CoF during the quarter. This was owing to a one-time benefit of ~17 bps due to interest reversal on holding company term deposit post-reverse merger.

Non-interest income growth was healthy at 32/28% YoY/QoQ. Opex grew by 29/11% YoY/QoQ, primarily driven by other expenses (+28/18% YoY/QoQ).

Pre-provision operating profit growth was strong at 26/13% YoY/QoQ. Credit costs are gradually normalizing and stood at 110 bps during the quarter versus 93 bps QoQ. Profit after tax grew by 7/10% YoY/QoQ. Asset quality remained stable with gross/net non-performing asset at 2.2/0.3% versus 2.2/0.2% QoQ.

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