Ujjivan Small Finance Bank: Q3 FY26 Sees Record NII and Robust Growth

Ujjivan Small Finance Bank has delivered a stellar performance in the third quarter of Financial Year 2026, showcasing significant growth across key financial and operational metrics. The bank reported its highest ever quarterly Net Interest Income (NII) of ₹1,000 crore, marking a substantial 12.8% year-on-year (YoY) increase and an 8.5% quarter-on-quarter (QoQ) rise. This robust NII, coupled with disciplined execution, translated into a strong Profit After Tax (PAT) of ₹186 crore, surging an impressive 70.8% YoY and 52.2% QoQ. The bank's Return on Assets (RoA) improved to 1.5%, up 45 basis points YoY, and Return on Equity (RoE) reached 11.5%, an increase of 423 basis points YoY, underscoring a healthy improvement in profitability.

Total deposits for Ujjivan Small Finance Bank grew by 22.4% YoY and 7.7% QoQ, reaching ₹42,223 crore, with a comfortable Credit-Deposit ratio of 88%. CASA (Current Account Savings Account) mobilization remained healthy, with the CASA ratio staying above 27% for two consecutive quarters. The Gross Loan Book (GLB) expanded by 21.6% YoY and 7.1% QoQ to ₹37,057 crore, driven by the highest-ever quarterly disbursements of ₹8,293 crore, which saw a 54.7% YoY and 4.5% QoQ growth. The secured book, a key focus area for the bank's diversification strategy, grew by 49% YoY to ₹17,825 crore, now constituting 48% of the total loan book, up from 39% in Q3 FY25.

Financial Highlights: A Snapshot

Strategic Diversification and Asset Quality Management

Ujjivan Small Finance Bank's strategic focus on diversifying its loan book towards secured assets is yielding positive results. The secured portfolio, including Housing, MSME, Gold, Vehicle, and Agri loans, has shown robust growth. Housing GLB grew 40.3% YoY to ₹8,231 crore, while the Micro Mortgage book more than doubled YoY to ₹1,329 crore. Gold loans scaled nearly five-fold YoY to ₹557 crore, and Agri loans sharply increased by 212% YoY to ₹607 crore. This diversification not only supports growth but also enhances the resilience of the asset book.

Asset quality continued its positive trend, with PAR (Portfolio at Risk) falling below 4% from 5.36% in December 2024. Gross Non-Performing Assets (GNPA) stood at 2.4%, and Net Non-Performing Assets (NNPA) at 0.6%. The Provision Coverage Ratio (PCR) improved to 76%, up 3% QoQ, reflecting positive signs in provision requirements. Slippages moderated to ₹221 crore in Q3 FY26. The micro-banking portfolio demonstrated strong collection efficiency, with Bucket X collections at 99.70% for December 2025, driven by enhanced credit policies and MFIN guardrails. The bank is also proactively managing its operating expenses, with the Cost to Income ratio remaining flat at 66% (adjusted below 65% for a one-off gratuity expense).

Operational Excellence and Future Outlook

Ujjivan Small Finance Bank is committed to operational excellence, leveraging digital initiatives and data analytics to enhance productivity and customer experience. The bank expanded its geographic footprint by adding 11 branches, bringing the total network to 777, completing its planned additions for FY26. Digital platforms are being utilized for customer acquisition, underwriting, and collections, with initiatives like dedicated LOS for LAP and WC businesses, automated CAM with GST/ITR fetch, and a DIY journey for opening SA/CA/FD accounts. The bank is also expanding its product suite with mid-corporate offerings and AD1 business, which commenced in November 2026.

Management remains optimistic about future performance, guided by a vision for sustainable growth. For FY26, the bank expects advances growth of approximately 20% and secured book growth of around 35%. Profitability targets include an RoE of 10-12% and an RoA of 1.2-1.4%. Credit costs are projected to normalize by Q1 or Q2 FY27, and the cost of funds is expected to further decline towards 7% by year-end. Ujjivan Small Finance Bank's healthy capital adequacy (CRAR at 21.6%) and robust liquidity (LCR at 165.6%) position it well to deliver sustainable and profitable growth in the coming quarters, reinforcing its commitment to building a better life for its customers and stakeholders.