Q1 2027 Ujjivan Small Finance Bank Ltd Earnings Call Transcript
Key Points
- Ujjivan Small Finance Bank Ltd (BOM:542904) reported a strong growth in deposits, with a 25% year-on-year increase, reaching Rs. 48,129 crores.
- The bank's CASA deposits grew by 37.8% year-on-year, indicating a strong focus on enhancing the value proposition for deposit customers.
- The bank operationalized 38 new branches, increasing the total count to 814, which supports its growth strategy.
- Asset quality remained stable with a GNPA of 2.17% and a strong provision coverage ratio of 85%.
- The bank's microbanking book grew by 16.8% year-on-year, driven by sustained momentum in the sector.
- The bank is cautious about the potential impact of El Nino on economic activity in the second half of the year.
- There is competitive pressure in the affordable housing market, which could impact yields.
- The cost of funds, although on a downward trajectory, remains a concern in a tight liquidity scenario.
- The bank's operating expenses are expected to increase due to capacity building expenses, which could impact profitability.
- The bank is mindful of the prevailing funding rate environment and competitive intensity in CASA mobilization, which could pressure margins.
(technical difficulty) El Nino in the months ahead. We believe that harvest of Ravi crops has led to better outcomes currently, but any delay in sowing of Karif crops might impact H2 economic activity.
This remains a key monitorable.
On the positive side, the high-frequency domestic economic indicators have largely shown stability.
RBI, in its June NPC review meeting, decided to keep the policy to repo rate unchanged at 5.25% while maintaining a neutral policy stance.
The ForEx hedging cost dispensations by RBI have been a welcome step and should help in liquidity and hence stabilizing the deposit trades.
While the year GDP growth for FY27 was recalibrated to 6.6%, inflation forecast was within the band defined by RBI and is projected at 5.1% for full year.
The Governor also emphasized that the banking sector continues to remain resilient. Supported by healthy credit demand, steady deposit mobilization, and adequate liquidity to meet the productive requirements of the
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