'Decision yet to be taken': Ujjivan Small Finance Bank's MD on universal bank transition

Ujjivan Small Finance Bank is yet to take a call on applying for a universal bank license. "Technically, we are qualified to apply for a universal bank license. Whether we do that immediately or not is something that the board will decide during this financial year and then take it forward. If the board decides to move forward, then that application would go on early FY26. As of now, that decision is yet to be taken," the company's managing director Ittira Davis told Siddharth Zarabi, Managing Editor, Business Today TV.

"We have presence in 26 states and no state has more than 15 per cent exposure, which is very unique for a small finance bank," he also mentioned.

When asked to comment on the current product mix, Davis said, "We've internally decided that 60:40 is a good mix with 60 per cent being unsecured and 40 per cent secured. We are working towards that and hope to get there by the end of FY26 to the 40 per cent secured."

The gross non-performing asset (GNPA) stood at 2.23 per cent in Q4 FY24 and net NPA was at 0.28 per cent. The bank's GNPA ratio stood below 3 per cent and net NPA ratio below 1 per cent for two consecutive years, making it eligible to apply for a license.

Reserve Bank of India (RBI) has recently came out with guidelines for the voluntary conversion of SFBs into universal banks.

On the earnings front, the Bengaluru-based lender has reported a 6.5 per cent year-on-year (YoY) increase in net profit, at Rs 329.6 crore, for the fourth quarter that ended March 31, 2024 (Q4 FY24).

Net interest income (NII) jumped 26.4 per cent to Rs 933 crore against Rs 738 crore in the corresponding quarter of FY23. NII is the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors. Net interest margin for the quarter under review came at 9.4 per cent.

The board has also recommended a final dividend of Rs 1.5 per share, subject to shareholders approval.

On Tuesday, shares of Ujjivan SFB settled 0.86 per cent lower at Rs 52.95. The stock has jumped 56.30 per cent on a year-to-date (YTD) basis.