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Informist, Wednesday, Jul. 22, 2026

 

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--Ujjivan Small Fin Bk: MSME portfolio showing strong momentum 
--CONTEXT: Comments from Ujjivan Small Fin Bk in post earnings analyst call 
--Ujjivan Small Fin Bk: Watchful of macro-environmental factors 
--Ujjivan Small Fin Bk: Aim to maintain yield on advances at current levels 
--Ujjivan Small Fin Bk: Completed pilot project on pre-owned car loans 
--Ujjivan Small Fin Bk: Plan to scale pre-owned car loans in FY28 
--Ujjivan Small Fin Bk: Credit cost to remain largely unchanged in Q2 from Q1 
--Ujjivan Small Fin Bk: Aim to maintain CASA growth at current levels 
--Ujjivan Small Fin Bk:Aim to maintain bulk deposits at 30% of total deposits

 

By Kabir Sharma and Vaishali Tyagi

 

MUMBAI – Ujjivan Small Finance Bank said its micro, small, and medium enterprises portfolio continues to witness strong momentum, while the lender remains watchful of macro-environmental factors and expects credit costs to remain broadly stable in the second quarter after improving asset quality in the June quarter.

 

Speaking during the bank's post-earnings analyst call, management said the MSME portfolio expanded 54% on year to INR 34.70 billion in the June quarter, supported by prudent underwriting standards and an expanded product suite. The lender also strengthened its MSME offerings with products such as purchase invoice discounting, while working capital and supply chain finance together now account for around 28% of the MSME book. 

 

The bank said it remained cautious about the operating environment despite healthy business trends. "We are watchful of the macro-environmental factors and will continue to take timely corrective steps to address any developments," the management said, while highlighting uncertainties stemming from geopolitical developments and weather-related risks. 

 

On lending yields, the bank expressed confidence of maintaining current levels across its key secured lending businesses despite competitive intensity. Management said affordable housing yields have remained broadly stable around 12.4-12.5% over the past several quarters and that the lender expects to sustain them through its focus on semi-urban markets and calibrated ticket sizes. Higher-yielding businesses such as micro-mortgages, gold loans, two-wheelers and the upcoming used-car loan portfolio are also expected to support the overall yield on advances.

 

The lender also outlined its plan to expand its vehicle finance franchise. It said the pilot project for pre-owned car loans has been completed in Karnataka and the business will now be tested across a few geographies during 2026-27 (Apr-Mar) before being scaled up in FY28, once the bank gains a better understanding of customer behaviour, pricing and regional dynamics. The bank added that any entry into heavy or light commercial vehicle financing would only be considered after the current financial year. 

 

On asset quality, management said trends in microfinance collections remain encouraging, with July collection efficiency tracking levels seen in the June quarter. As long as collection efficiency remains around current levels, credit costs in the second quarter should remain largely unchanged from the first quarter, with only marginal movement if collection efficiency fluctuates by 5-7 basis points, the management said. 

 

Management said it is confident of maintaining the current pace of current account savings account deposit growth after delivering about 38% year-on-year growth in the June quarter, supported by initiatives across key markets, customer segmentation and branch expansion. It added that the lender remains committed to achieving its CASA ratio targets and could even modestly outperform its earlier guidance. 

 

On deposit mix, the bank said it intends to keep bulk deposits around 30% of total deposits through the year. "Our bulk deposit ratio is about 30% and our guiding factor is to keep it in and around 30%," the management said, adding that various initiatives are under way to ensure the ratio remains close to that level while retail term deposits continue to gather momentum. 

 

The bank's net profit for the June quarter rose to INR 3.17 billion from INR 1.03 billion for the year-ago period. Thursday, the lender's shares ended at INR 568.80 apiece on the National Stock Exchange, up nearly 2%.  End

 

Edited by Akul Nishant Akhoury

 

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