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Informist, Saturday, Jan. 17, 2026

By Taniva Singha Roy

MUMBAI - Ujjivan Small Finance Bank is expected to report a strong growth in its net profit for the December quarter on the back of strong loan growth, improving margins, and better asset quality. The small finance bank's net interest income is also likely to improve on a yearly and a sequential basis, brokerage firms said.

Ujjivan is expected to report a net profit of INR 1.73 billion for the December quarter, up a whopping 59% from a year ago, according to the average of estimates from six brokerages. Sequentially, the net profit is seen rising nearly 42%.

The small finance bank's net interest income for the December quarter is seen higher at INR 9.75 billion, up nearly 10% from INR 8.87 billion a year ago. On a trailing basis, the net interest income is seen up nearly 6%. Estimates for net interest income range from INR 9.56 billion to INR 10.0 billion. The highest estimate for net interest income was by Yes Securities Ltd., while the lowest estimate for the same was by JM Financial Institutional Securities Pvt. Ltd.

Brokerages have divergent views on the small finance bank's net profit due to the difference in estimates of provisions. Emkay Global Financial Services Ltd. has the lowest estimate for net profit at INR 1.60 billion, while ICICI Securities Ltd. has the highest at INR 1.95 billion. The small finance bank is scheduled to report its December quarter earnings on Thursday.

Although the bank is likely to see healthy growth in its top line and bottom line, higher loan loss provisions will keep earnings growth in check, Emkay Global said. However, these slippages or addition of new non-performing assets are likely to remain range-bound, it said.

The Bengaluru-based bank's provisions rose 56% on year and 4.5% on quarter to INR 2.35 billion in the trailing quarter.

The small finance bank's gross loan book rose 21.6% on year to INR 370.55 billion as on Dec. 31, according to provisional figures released by the bank. Its total deposits were up 22.2% on year at INR 422.19 billion as of Dec. 31. "NIM is expected to improve sequentially by 10 basis points, with continued decline in cost of deposits and lower impact from slippage-related interest reversals and loan mix shift," Kotak Securities Ltd. said.

On the asset quality front, brokerages expect improvement led by lower slippages and improved collection efficiency from loans to the microfinance sector. In the previous quarter, the bank's gross non-performing assets ratio fell to 2.45% from 2.52% for the June quarter. The net non-performing asset ratio declined to 0.67% as on Sept. 30 from 0.70% in the June quarter.

"We expect better business momentum with 5% quarter on quarter loan growth and expect NIMs to improve and better performance on asset quality," Elara Securities (India) Pvt Ltd said. In the September quarter, the net interest margin contracted 127 basis points to 7.9%. The return on assets fell 117 bps to 1% and return on equity fell 797 bps to 7.7% for the September quarter.

The small finance bank hopes to get a commercial bank licence and is awaiting a decision by the Reserve Bank of India. A commercial banking licence will allow the bank to transition from a small finance bank to a universal bank with broader operations.

Friday, shares of Ujjivan Small Finance Bank closed higher 2% at INR 60.35 on the National Stock Exchange. The stock is up nearly 24% from Oct. 17. when the company had reported its earnings for the September quarter.

All 11 brokerage reports on the company available with Informist have a 'buy' or equivalent rating on the stock. The average target price for 'buy' recommendations is INR 54, which is nearly 12% lower than the current market price.

The following are the Oct-Dec earnings estimates for Ujjivan Small Finance Bank from six brokerages in descending order of the estimate of net profit in INR million:

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Edited by Vandana Hingorani

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