Ujjivan Small Finance Bank Q2 Results: Net profit rises 11% YoY to Rs 328 crore
Ujjivan Small Finance Bank on Friday reported a modest 11% rise in net profit at Rs 328 crore for the quarter to September 30, even as its interest income and earnings from non-core operations helped pre-provisioning operating profit rise 26%.
The net interest margin for the quarter stood at 8.8%, down 102 basis points year-on-year, due to the rise in cost of funds. NIM was 9.2% three months back.
«We are aiming to take the NIM back to over 9% to the first quarter level,» managing director Ittira Davis said.
«We have not passed on the rise in cost of funds entirely to micro banking customers.
We have raised lending rates on microfinance loans only by 100 basis points in contrast to the 250 basis point rise in policy rate (since May last year). This is also a reason behind the fall in NIM,» Davis said.
The reason behind the muted rise in net profit was Rs 47 crore set aside as provisions and contingencies for the quarter as compared with Rs 10 crore right back in provision in the year ago period.
«Our credit cost was lower earlier, because of provision write backs following recovery and upgradation of stressed loans.
Now the provisions are getting normalised,» managing director Ittira Davis said, explaining the reason behind the higher provisions despite improvement in asset quality.
The bank's net interest income, the difference between interest earned and interest expenses, rose 24% at Rs 823 crore, in sync with business growth. It booked Rs 189 crore as other income, against Rs 147 crore in the year ago quarter.
Operating profit was seen at Rs 483 crore against Rs 385 crore.
Ujjivan's gross loan portfolio grew 27% year-on-year to Rs 26,574 crore. Its asset quality improved with gross non-performing assets ratio
