Ujjivan Small Finance Bank Approves Sale of ₹364.51 Crore Loan Pool to ARC

Ujjivan Small Finance Bank (SFB) has approved the sale of a ₹364.51 crore micro banking loan pool to an Asset Reconstruction Company (ARC) as part of its efforts to enhance asset quality and financial health. The loan pool includes ₹294.51 crore in non-performing assets (NPAs) and ₹70 crore in technically written-off loans.

The decision was approved by the bank’s authorised board committee and is expected to contribute to improved financial stability. The proposed transaction was finalised at 3:06 PM today, and Ujjivan SFB has stated that further details will be disclosed upon completion of the deal.

Provisioning and Risk Coverage 

To mitigate potential risks associated with the loan pool, Ujjivan SFB has maintained an overall provision coverage of 66.51%. This ensures adequate risk protection while allowing the bank to focus on improving its loan book quality.

Asset Quality and Financial Performance 

The move comes as Ujjivan SFB continues to manage its asset quality, following an increase in its gross non-performing assets (GNPA) ratio to 2.68% in Q3 FY25, up from 2.52% in the previous quarter. However, net NPA remained stable at 0.56%.

Ujjivan SFB’s total gross loan book stood at ₹30,466 crore, reflecting a year-on-year growth of 9.8%. Notably, the bank’s secured loan portfolio has expanded significantly, accounting for 39.3% of the total loan book as of December 2024, compared to 28.3% in the previous year.

Collection Efficiency and Portfolio Performance 

The bank has reported a steady improvement in its collection efficiency, which reached 96% in December 2024. Additionally, the bucket X collection efficiency for both group and individual loan books stood at an impressive 99.3%.

Meanwhile, the portfolio at risk (PAR) was recorded at 5.4%, with the GNPA and net NPA levels at 2.7% and 0.6%, respectively. These figures indicate that while asset quality challenges persist, the bank has maintained strong collection performance and risk management strategies.

Stock Performance

On February 24, 2025, Ujjivan Small Finance Bank share price traded 1.95% lower at ₹31.75 at 9:45 AM (IST). Ujjivan Small Finance Bank’s share price reached a 52-week high of ₹56.73, and a 52-week low of ₹30.85. As per BSE, the total traded volume for the stock stood at 2.71 lakh shares with a turnover of ₹86.38 lakhs.

At the current price, Ujjivan Small Finance Bank shares are trading at a price-to-earnings (P/E) ratio of 6.30x, based on its trailing 12-month earnings per share (EPS) of ₹5.03, and a price-to-book (P/B) ratio of 1.04, according to exchange data.

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