Ujjivan SFB Q2 FY26 Results: Profit Jumps 18% to ₹122 Crore

Introduction

Ujjivan Small Finance Bank announced a solid performance for the second quarter of the financial year 2025-26, reporting a net profit of ₹122 crore. This marks a sequential growth of 18.2% compared to the previous quarter. The results, approved by the Board of Directors, reflect the bank's progress in expanding its loan book, mobilizing deposits, and improving asset quality. The performance was driven by record-high disbursements and a strategic shift towards a more diversified and secured loan portfolio.

Financial Performance Highlights

The bank's financial metrics for the quarter ending September 30, 2025, showed broad-based improvement. Total income for the quarter stood at ₹1,938 crore, a 3.79% increase from ₹1,867 crore in the June 2025 quarter. Net Interest Income (NII) saw a healthy rise of 7.7% quarter-on-quarter to ₹922 crore, reversing a trend of decline seen in the previous three quarters. However, the net profit of ₹122 crore was down 47.6% when compared year-on-year, reflecting a higher base in the corresponding quarter of the previous year. The bank's pre-provision operating profit (PPoP) grew by 9.6% sequentially to reach ₹395 crore.

Record Disbursements and Loan Book Growth

Ujjivan SFB achieved its highest-ever quarterly disbursements, totaling ₹7,932 crore, which represents a significant 47.6% year-on-year increase and a 21.3% rise from the preceding quarter. This strong loan origination pushed the gross loan book to ₹34,588 crore, up 14% year-on-year and 3.9% quarter-on-quarter. A key element of this growth is the increasing share of secured loans, which now constitute 46.8% of the total loan book, a substantial increase from 34.9% in September 2024. This strategic diversification is aimed at building a more resilient and sustainable portfolio.

Deposit Mobilization and Cost of Funds

The bank's deposit base expanded to ₹39,211 crore, marking a 15.1% year-on-year growth. A notable achievement was the growth in Current Account and Savings Account (CASA) deposits, which increased by 22.1% year-on-year to ₹10,783 crore. The CASA ratio improved to 27.5% as of September 2025. The bank successfully managed its cost of funds, which declined to 7.3% from 7.6% in the previous quarter. Management expects further benefits from deposit repricing and phased regulatory changes in the coming quarters.

Asset Quality Improves

Ujjivan SFB demonstrated an improvement in its asset quality. The Gross Non-Performing Assets (GNPA) ratio stood at 2.45%, while the Net Non-Performing Assets (NNPA) ratio was 0.67% as of September 2025. This is an improvement from the previous quarter's figures of 2.52% and 0.71%, respectively. The Provision Coverage Ratio (PCR) remained strong at 73%. Collection efficiency in the core micro-banking segment was consistent at 99.5%, indicating stable repayment behavior among its customers.

Management Commentary

Sanjeev Nautiyal, MD & CEO of Ujjivan Small Finance Bank, commented on the results, stating, “We have delivered a well-calibrated growth for the quarter by ensuring absorption of excess liquidity. Our CASA augmentation efforts are just beginning to take shape.” He highlighted the strong loan origination and the disciplined approach to diversifying the asset suite. Nautiyal also expressed confidence in achieving sequential improvements in credit costs for the remainder of the financial year, supported by stabilizing asset quality in the microfinance portfolio.

Future Outlook and Guidance

For the full financial year 2026, the bank has provided guidance for advances growth of approximately 20%, with the secured loan book expected to grow by around 35%. The management anticipates the cost-to-income ratio to be around 67% and credit costs to be contained within the 2.3% to 2.4% range. The target for Return on Equity (ROE) is set between 10% and 12%, with Return on Assets (ROA) projected at 1.2% to 1.4%. A significant development on the horizon is the bank's application for a Universal Banking License, with a decision from the Reserve Bank of India pending.

Conclusion

Ujjivan Small Finance Bank's Q2 FY26 results showcase a period of robust operational execution and strategic progress. The sequential growth in profitability, record disbursements, and a strengthening liability franchise underscore the bank's resilience. The continued focus on portfolio diversification towards secured assets and improving asset quality metrics position the bank well for sustainable growth. Investors will be watching for the outcome of its universal bank license application, which could be a key catalyst for its future trajectory.