Ujjivan Small Finance Bank reported a 5% year-on-year decline in net profit to ₹693 crore for FY26. Despite this, its gross loan book surged 26.6% to ₹40,655 crore and total deposits grew 21.4% to ₹45,668 crore. Increased provisioning due to microfinance sector stress impacted net profit.
Ujjivan Small Finance Bank FY26 Results
Profit After Tax: ₹693 crore
Gross Loan Book: ₹40,655 crore (up 26.6% YoY)
Reader Takeaway: Strong balance sheet growth faces headwinds from microfinance sector stress impacting profitability.
What just happened
Ujjivan Small Finance Bank reported a Net Profit After Tax of ₹693 crore for the financial year 2025-26, a 5% decrease from ₹726 crore in FY 2024-25. This decline was attributed to higher credit costs and increased provisioning for the microfinance sector. Despite lower net profit, the bank's Gross Loan Book grew by 26.6% to ₹40,655 crore, and Total Deposits rose by 21.4% to ₹45,668 crore. Net Interest Income stood at ₹3,871 crore.
Why this matters
The results highlight a mixed performance. While Ujjivan SFB is successfully expanding its loan and deposit base, the increased provisioning suggests ongoing challenges within the microfinance segment. The bank's strategic shift towards secured lending, with segments like Gold Loans and Vehicle Finance showing substantial growth, could offer a more stable revenue stream going forward.
The backstory
Ujjivan Small Finance Bank has been focusing on diversifying its loan portfolio beyond traditional microfinance. The bank's pursuit of a universal bank license remains a key long-term objective, though its recent application was returned by the RBI, asking for further growth demonstration. The bank has also been working on improving its CASA ratio and retail deposit base.
What changes now
The bank will continue its strategy of increasing its share of secured lending, aiming to build a more resilient balance sheet. Management will focus on managing credit costs related to the microfinance portfolio while leveraging digital channels for growth. New incentive plans, including stock units, have been proposed to align employee interests with long-term value creation.
Risks to watch
Key risks include the continued stress in the microfinance sector, potential competitive pressures on deposit rates, and evolving liquidity conditions. Maintaining asset quality while pursuing aggressive growth, particularly in unsecured microfinance loans, remains a significant challenge.
Peer comparison
Ujjivan SFB's loan growth of 26.6% is robust, likely outpacing many peers in the small finance bank segment. Deposit growth of 21.4% is also strong. However, its net profit decline contrasts with potentially steadier performances from banks with less exposure to stressed sectors like microfinance.
Context metrics (time-bound)
- Gross Loan Book FY26: ₹40,655 crore (up 26.6% YoY)
- Total Deposits FY26: ₹45,668 crore (up 21.4% YoY)
- Net Profit FY26: ₹693 crore (down 5% YoY)
- CASA Ratio FY26: 28.6% (up from 25.5%)
- Gross NPA FY26: 2.3% (vs 2.2% YoY)
- Provision Coverage Ratio FY26: 81.2%
What to track next
Investors should closely monitor the trajectory of the microfinance loan portfolio's asset quality and the bank's success in growing its secured lending book. Progress on its universal bank aspirations and the impact of digital initiatives on operational efficiency will also be crucial.