Ujjivan SFB posts record Rs 365 crore Q2 profit, lines up Rs 409 crore capital raise

Ujjivan Small Finance Bank reported its highest-ever quarterly profit after Tax of Rs 365 crore for the quarter ended September 2026, nearly trebling from a year earlier as loan growth, better margins and lower stress in the micro-banking portfolio lifted profitability.

Profit after tax rose 199.9 per cent year-on-year and 15.3 per cent sequentially. Net interest income reached a quarterly high of Rs 1,244 crore, up 35 per cent year-on-year, while net interest margin improved by 55 basis points to 8.4 per cent. Return on assets rose to 2.4 per cent from 1 per cent a year earlier, while return on equity improved to 19.7 per cent.

The performance marks a sharp continuation of the recovery visible in the June 2026 quarter, when the bank had reported profit after tax of Rs 316.54 crore, compared with Rs 103.22 crore a year earlier. It also contrasts with FY26, when annual profit declined 5 per cent to Rs 693 crore amid stress in the micro-banking portfolio and higher credit costs.

Alongside the results, Ujjivan’s board approved a Rs 409 crore preferential capital issue to International Finance Corporation, Bajaj Life Insurance, HDFC Life Insurance and Aditya Birla Sun Life Insurance, subject to shareholder approval. Interim Chief Executive Officer Carol Furtado said the issue, being undertaken at a premium to the bank’s current book value per share, is expected to add about Rs 0.8 per share to book value as of September 2026.

The proposed infusion is smaller than the broader Rs 2,000 crore equity-raising framework approved earlier, but it brings additional capital as the bank accelerates growth in secured retail and business loans. Capital adequacy stood at 20.69 per cent at the end of September, while the average daily liquidity coverage ratio was 131 per cent during the quarter.

Deposits crossed the Rs 50,000 crore mark, rising 29.2 per cent year-on-year and 5.2 per cent sequentially to Rs 50,643 crore. CASA deposits stood at Rs 13,176 crore, up 22.2 per cent from a year earlier, although the CASA ratio was 26 per cent. The bank’s cost of funds declined 40 basis points year-on-year to 6.9 per cent, supported by deposit repricing.

Its gross loan book expanded 32.1 per cent year-on-year and 6.5 per cent sequentially to Rs 45,699 crore, with quarterly disbursements rising 32.3 per cent to Rs 10,495 crore. Secured loans grew faster than the overall book, increasing 47 per cent to Rs 23,803 crore and accounting for 52.1 per cent of total advances.

That mix shift is central to Ujjivan’s effort to reduce dependence on unsecured microfinance. Affordable housing loans crossed Rs 10,000 crore, while micro mortgages, MSME loans, gold loans, agriculture banking and two-wheeler finance recorded rapid growth. Gold loans rose 209.8 per cent year-on-year to Rs 1,275 crore, though from a relatively smaller base.

Asset quality also improved. Portfolio at risk fell to 3.57 per cent from 4.44 per cent a year earlier. Gross NPA declined to 2.10 per cent from 2.45 per cent, while net NPA improved to 0.31 per cent from 0.67 per cent. Provision coverage increased to 85 per cent and Bucket-X collection efficiency for group and individual loans stood at 99.71 per cent.

The bank received the first Rs 500 crore tranche under direct assignment and said it increased its securitisation pool by the same amount in October, adding another funding avenue as it scales lending.

Furtado said the bank remained on track to achieve the upper end of its 2 per cent return-on-assets guidance. The leadership transition remains a key monitor, however, after former Managing Director and Chief Executive Officer Sanjeev Nautiyal retired early on health grounds. The nomination and remuneration committee is searching for a permanent candidate.

As of 2:31 pm on October 16, 2026, Ujjivan Small Finance Bank shares were trading at Rs 62.82, down 3.19 per cent from the previous close. The stock has gained 34.35 per cent over the past year, outperforming the BSE 500, which declined 5.17 per cent over the same period.

Disclaimer: The article is for informational purposes only and not investment advice.