Ujjivan SFB stays in red, net loss widens in Q2 to Rs 274 cr sequentially

Provisions stay elevated in Q2; though lower than Q1

Troubled lender Ujjivan Small Finance Bank (SFB) posted a net loss of Rs 274 crore in second quarter ended September 2021 (Q2FY22), on erosion in interest margin and burden of provisions for stressed loans.

It had booked a net profit of Rs 96 crore in the second quarter of previous financial year (Q2FY21). Sequentially, its net loss rose from Rs 233 crore in the first quarter ended June 2022 (Q1Fy22).

Its net interest income (NII), interest earned minus expenses, declined sharply to Rs 391 crore in Q2Fy22 from Rs 470 crore in Q2Fy21. Sequentially, also NII fell from Rs 384.4 crore in June 2021 quarter. Net Interest Margin (NIM) fell to 8.1 per cent in Q2Fy22 from 10.2 per cent a year ago, the bank said in a statement.

Martin P S, Officer on Special Duty (OSD), Ujjivan SFB Bank said, the reporting quarter (Q2 FY22) has shown significant traction in business momentum, over the previous quarter, with improvement in both – disbursements and collections.

According to filing with BSE, its provisions and contingencies jumped to Rs 437 crore in Q2Fy22 from Rs 98 crore in Q2Fy21. However, they declined sequentially from Rs 473 crore in Q1Fy22.

The asset quality remained grim with Gross Non-performing assets (NPAs) at 11.8 per cent in September 2021, up from proforma 1.2 per cent a year ago and 9.79 per cent in June 2021.

The net NPAs also rose to 3.29 per cent in September 2021 from proforma 0.3 per cent in September 2020 and 2.68 per cent in June 2021. The provision coverage ratio stood at 75 per cent in September 2021.

Martin P S, Officer on Special Duty (OSD), Ujjivan SFB Bank said “we believe, subject to potential third wave of Covid, our GNPA has peaked out and will gradually reduce hereon.  We remain confident that the Bank would tide over the challenges posed by the current business environment and would emerge strong.”

Gross advances rose by five per cent on Year-on-Year basis (Y-o-Y basis) at Rs 14,514 crore. Deposits grew 31 per cent Y-o-Y at Rs14,090 crore in September 2021. The share of low cost deposits – current account and savings account – improved to 22.5 per cent in September 2021 from 16.5 per cent a year ago.

The reporting quarter (Q2 FY22) has shown significant traction in business momentum, over the previous quarter, with improvement in both – disbursements and collections, he added.

Its capital Adequacy Ratio stood at 22.19 per cent in September 2021, down from 30.99 per cent a year ago and 25.88 per cent in June 2021.