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Informist, Tuesday, Jul. 14, 2026

 

By Janaki Venugopalan

 

MUMBAI – Ujjivan Small Finance Bank Ltd. is expected to report nearly three times higher net profit on year for the June quarter on the back of improved asset quality, sustained and diversified loan growth, and a sharp decline in on-year provisions, according to brokerages tracking the bank. The bank's net interest income is expected to increase both on year and sequentially due to a stable net interest margin and an increase in secured assets.

 

The Bengaluru-based bank is estimated to report a net profit of INR 2.83 billion for the June quarter, as against INR 1.03 billion for the year-ago quarter, according to the average of estimates from six brokerages. The profit will be flat sequentially. The highest estimate for the small bank's net profit is INR 2.92 billion from JM Financial Institutional Securities Pvt. Ltd. and the lowest is INR 2.59 billion from Kotak Securities Ltd.

 

The bank is expected to report a net interest income of INR 11.75 billion for the June quarter, up from INR 10.93 billion sequentially and sharply up from INR 8.56 billion a year ago. The highest estimate for net interest income is INR 12.22 billion from ICICI Securities Ltd. and the lowest is INR 11.4 billion from Elara Securities Pvt. Ltd.

 

Ujjivan Small Finance Bank's earnings are likely to be driven by a sharp increase in its secured loan book and sustained recovery in its microfinance book. The bank's provisions had declined almost 46% on year in the March quarter. The non-performing asset ratio had narrowed to 2.17% in the June quarter from 2.27% a quarter ago and from 2.52% a year ago.

 

The bank has diversified and grown its secured asset book, including loans for housing, vehicles, gold loans, and loans to micro, small, and medium enterprises, and has also reduced its exposure to unsecured loans. The bank reported a gross loan book of INR 429 billion as of Jun. 30, of which the total secured book was INR 215.55 billion, up 42% on year. The secured loan book is 50.2% of the total loan book as of June, up from 49.4% as of March.

 

Loans under its group loans scheme rose 17% to INR 151.85 billion, while housing loans totalled INR 112.1 billion as of June. The bank's outstanding vehicle loans nearly doubled on year and gold loans rose over three times; both together now make up over INR 10 billion of the loan portfolio.

 

The net interest margin of the bank is estimated to be almost flat or marginally lower on quarter, supported by stable cost of deposits and credit cost.

 

Ujjivan Small Finance Bank's loan book has historically been led by microfinance. The bank had faced a surge in non-performing assets due to an over exposure to the microfinance segment in the financial year 2024-25 (Apr-Mar) that led to the bank selling-off INR 3.65 billion worth of bad loans to clean up its asset book and improve its profitability. "We expect banks, which were impacted by microfinance and lower ticket unsecured loans, to report a healthy reduction in credit costs," Kotak said.

 

The banking sector is expected to record a strong growth in loan performance and firm asset quality across public and private sector banks, with no discernible impact from the war in West Asia, according to Kotak Securities.

 

Ujjivan Small Finance Bank will detail its June quarter earnings on Jul. 23. At 1003 IST, shares of Ujjivan Small Finance traded at INR 66.26 apiece on the National Stock Exchange, up 1.7% from Tuesday. The stock has risen over 6% since the bank announced its March quarter earnings on May 8.

 

All seven brokerage reports on the bank available with Informist have a "buy" or equivalent recommendation on the stock. The average target price of these brokerages is INR 74 per share, which is nearly 12% higher than the current market price.

 

Following are the June quarter earnings estimates for Ujjivan Small Finance Bank from seven brokerage firms, in descending order of the estimate of net profit, in INR billion:

 

Brokerage	Net Interest Income	Net Profit
JM Financial Institutional Securities Pvt Ltd	11.77	2.92
ICICI Securities Ltd	12.22	2.92
Nuvama Wealth Management Ltd	11.72	2.91
YES Securities (India) Ltd	11.82	2.88
Elara Securities (India) Pvt Ltd	11.40	2.76
Kotak Securities Ltd	11.57	2.59
Average	11.75	2.83

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Shubhayan Bhattacharya

 

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