Ujjivan SFB Q3 Profit Soars 71% to ₹186 Crore in FY26

Introduction

Ujjivan Small Finance Bank announced a robust financial performance for the third quarter of fiscal year 2026, reporting a 71% year-on-year increase in net profit. The bank's profit after tax stood at ₹186 crore for the quarter ending December 31, 2025, a significant rise from the ₹109 crore recorded in the corresponding period of the previous year. This growth was primarily fueled by record net interest income and a notable improvement in the bank's asset quality.

Stellar Financial Performance

The bank's profitability was significantly boosted by its highest-ever quarterly Net Interest Income (NII), which reached ₹1,000 crore. This represents a 12.8% increase compared to the same quarter last year. The strong NII performance reflects efficient management of assets and liabilities. Furthermore, the bank's pre-provision operating profit (PPOP) saw a healthy 23% year-on-year rise, growing to ₹440 crore from ₹359 crore. This indicates strong core operational efficiency before accounting for provisions for bad loans.

Loan Book and Deposit Growth

Ujjivan SFB continued its growth trajectory in both advances and deposits. The gross loan book expanded by 21.6% year-on-year to reach ₹37,057 crore. This growth was supported by the highest-ever quarterly disbursements of ₹8,293 crore, showcasing strong credit demand across its product segments. On the liability side, total deposits grew by 22.4% to ₹42,223 crore as of December 2025. The bank maintained a healthy credit-to-deposit ratio of 88%, indicating a balanced approach to lending and funding.

Strategic Shift Towards Secured Lending

A key highlight of the quarter was the bank's successful diversification of its loan portfolio. The share of secured loans in the total loan book increased to 48% as of December 2025, up from 39% a year earlier. This strategic shift is aimed at de-risking the portfolio and ensuring more stable asset quality. The growth in the secured book was driven by strong performance in segments such as housing, MSME, gold, and vehicle loans, aligning with the bank's long-term strategy.

Asset Quality Improvement

The bank demonstrated a marked improvement in its asset quality metrics. The Gross Non-Performing Assets (GNPA) ratio declined to 2.38% at the end of December 2025, compared to 2.68% in the same period last year. The Net NPA (NNPA) ratio remained stable at 0.57%. This improvement is attributed to tapering provisioning requirements as collection efficiency has strengthened. The microfinance collection efficiency stood at a strong 99.7% in December, reflecting better credit discipline among borrowers.

Key Financial Metrics (Q3 FY26 vs Q3 FY25)

Management Commentary and Outlook

Managing Director and CEO Sanjeev Nautiyal commented on the results, stating, "India's macroeconomic environment continues to remain conducive, with strong GDP growth... translating into a supportive environment for credit growth and improved asset quality." He emphasized that the bank's performance was due to an all-around effort across both unsecured and secured products, with the scaling up of secured portfolios being a key part of the diversification strategy.

Market Reaction and Corporate Update

Investors responded positively to the strong quarterly numbers. The shares of Ujjivan Small Finance Bank closed at ₹62.02 on the BSE, marking a significant gain of 7.38% over the previous day's close. In a separate corporate development, the bank's board approved the appointment of Aniruddha Paul as an Independent Director for a term of three years, effective January 22, 2026.

Conclusion

Ujjivan Small Finance Bank's third-quarter results for FY26 highlight a period of strong, well-rounded growth. The significant jump in profitability, record NII, and a healthier balance sheet underscore the bank's operational strengths. The strategic increase in the share of secured loans, coupled with improving asset quality, positions the bank for sustainable growth in the future. The positive market reaction reflects investor confidence in the bank's strategy and execution.