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Improvement in Asset Quality and Strong Loan Growth: Ujjivan Small Finance Bank’s Quarterly Update

Ujjivan Small Finance Bank witnessed a surge of more than 6 percent in early trade, hitting a fresh 52-week high of Rs 60.40 on October 6. This surge came after the bank’s robust quarterly update, which showcased strong loan growth and improved asset quality. The lender’s total deposits grew by 43 percent year on year (YoY) to reach Rs 29,134 crore in the July-September quarter. Sequentially, the deposits increased by 9 percent. Additionally, the bank’s advances recorded a growth of 27 percent YoY and 5 percent on a quarterly basis, reaching Rs 26,600 crore.

Furthermore, the disbursements witnessed a significant 18 percent YoY growth, amounting to Rs 5,749 crore for the quarter. On a sequential basis, disbursements rose by 9 percent.

One of the highlights of Ujjivan Small Finance Bank’s quarterly update was the notable improvement in asset quality. The bank’s gross non-performing assets (NPAs) decreased from 2.4 percent in the previous quarter to 2.2 percent in the July-September quarter. In comparison, the gross NPAs stood at 4.4 percent in the same quarter of the previous fiscal year.

The positive quarterly update has generated optimistic expectations for the upcoming earnings season, leading to a spike in the stock price. At 10.12 am, Ujjivan Small Finance Bank was trading at Rs 60.05 on the National Stock Exchange, reflecting a 5.5 percent increase from the previous close. This surge follows the stock’s strong performance over the past months, delivering approximately 96 percent returns this year and reaching a 52-week high in the previous session.

In addition to the bank’s impressive quality and profitability in recent quarters, the impending merger of Ujjivan Small Finance Bank and Ujjivan Financial Services, which was announced in October 2022, has further fueled gains in the counter. The swap ratio for the merger implies that a shareholder in Ujjivan Financial Services will receive 11.6 shares of Ujjivan Small Finance Bank. While the merger and share swap ratio were approved in October last year, the Extraordinary General Meeting for shareholder approval is scheduled for November 3.

AI legalese decoder can assist in this situation by simplifying and translating complex legal jargon used in the merger and swap ratio announcement. It can help stakeholders better understand the terms and implications of the merger, making it easier for them to analyze the potential benefits and make informed decisions regarding their investments. The AI legalese decoder tool reduces the ambiguity and confusion often associated with legal language, enabling individuals to comprehend the details of the merger more effectively.

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