Ujjivan SFB’s cost of funds to go up, NIM to be about 9% for full year: MD

economictimes.indiatimes.com:

Ittira Davis, MD & CEO, Ujjivan SFB, says “the cost of funds is going to be slightly higher than what it is today and the NIM for the full year is going to be about 9%. The bank’s NIM was 9.2% this quarter and we are expecting it to average for the full year at about 9% because we had anticipated a small decline in the interest rates in the second half of the year. That is now looking unlikely and the current interest rate scenario is expected to play out much longer during this financial year, possibly for the whole financial year.”Let us talk about the numbers in terms of your cost of funds. The yields have risen and have been hitting the margins of the company. Has the cost of funds peaked out now and should your NIMs be around 9- 9.5% for this financial year?Let me just focus on NIMs.

Our NIM was 9.2% this quarter and we are expecting it to average for the full year at about 9% because we had anticipated a small decline in the interest rates in the second half of the year. That is now looking unlikely and the current interest rate scenario is expected to play out much longer during this financial year, possibly for the whole financial year. So the cost of funds is going to be slightly higher than what it is today and the NIM for the full year is going to be about 9%.

But having said that, there is some increase in yields from the higher interest rates on the micro-banking portfolio. That is yet to play out fully because that was done in two tranches of 0.5%; the first tranche in September of last year and the second tranche in March this year. That applies only to the new portfolio.