With aggressive rate hikes by the central banks across the world, all eyes were on the financial health of the banking system to analyse the damage caused by the higher interest rates. Some leading banks across the world have seen taking a major hit in the past few weeks but interestingly, the Indian banking system remains healthy and robust. Top banks have reported decent Q4 numbers but one Small Finance Bank has stolen the limelight with its robust growth and profitability and has exceeded D-street expectations.
Ujjivan Small Finance Bank is a leading small finance bank, primarily engaged in the range of financial services to its customers, which includes savings and current accounts, fixed deposits, recurring deposits, microloans, personal loans, business loans and other financial products and services. It has a strong focus on financial inclusion and serves primarily low-income and underserved segments of the population.
In its recent quarterly earnings, the SFB reported a 145% YoY jump in net profits to Rs 309 crore in March 2023. Strong growth is primarily driven by a robust loan book, which grew 33% YoY to Rs 24,085 crore, largely due to micro group loans and individual loans. In times to come, the microfinance lender expects its loan book to grow at a CAGR of over 25% and its deposits to grow at over 30% in 2023-24. Interestingly, Gross Non-Performing Asset (GNPA) fell to 2.60% in Q4FY23 from 7.10% a year ago.
Commenting on the results, managing director and CEO, Ittira Davis said. “We picked up our branch expansion during the quarter with 31 new branches and will continue it in the new fiscal with around 100 branches. In FY24, we would be building on the base of FY23. The contribution of secured products in growth would see improvement as our strategy for respective verticals take clearer shape. Overall, we remain confident of the business growth and profitability.”
On Friday, the shares of UJJIVANSFB surged over 5% to trade above Rs 30 a piece on the exchanges.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations.