Ujjivan Small Finance Bank reported an all-time high quarterly profit of INR 365 crore for Q2 FY27. The bank also secured board approval to raise INR 409 crore via preferential share allotment to marquee investors. With a 32% growth in its loan book and strong deposit mobilization, the bank continues to expand its reach, though management is monitoring potential margin pressure from interest rate cycles.
Ujjivan Small Finance Bank Q2 FY27 Profit Hits Record INR 365 Crore
Ujjivan Small Finance Bank reported a record quarterly profit of INR 365 crore for Q2 FY27, backed by a 35% jump in Net Interest Income.
The board also approved a capital raise of INR 409 crore via a preferential issuance of shares to institutional investors.
Reader Takeaway: Strong loan book growth and capital infusion provide stability; monitor rising interest costs and regulatory shifts.
What just happened
Ujjivan Small Finance Bank has posted its strongest quarterly performance to date, with PAT hitting INR 365 crore. The bank's loan book expanded 32.1% year-on-year to INR 45,699 crore, while total deposits crossed the INR 50,000 crore milestone. To support further expansion, the board cleared a capital infusion of INR 409 crore from investors including IFC, HDFC Life, and Bajaj Life, which is expected to boost the Capital to Risk-Weighted Assets Ratio (CRAR) by 1.2%.
Why this matters
The capital raise signals strong confidence from major institutional players in the bank's long-term strategy. The shift toward secured business lines—now 52.1% of the total book—demonstrates a balanced growth approach, reducing reliance on high-risk segments. Despite a volatile macro environment, the bank maintained a robust Return on Assets (ROA) of 2.4% and an ROE of 19.7%.
What changes now
Management has adjusted its NIM guidance to 8.35% for the second half of the year, anticipating the impact of recent repo rate hikes. Additionally, operational efficiency is set to improve, with the opex-to-ATA ratio target revised downward to 6.2% for the full year. The search for a new MD continues, with an appointment expected within the next four months.
Risks to watch
Investors should keep a close eye on the cost of funds. Management explicitly noted that policy rate hikes will likely increase interest expenses. Furthermore, potential volatility in rural demand due to drought conditions in select pockets of Maharashtra and Karnataka and uncertainty surrounding insurance commission regulations remain key areas to monitor for their impact on non-interest income.
Context metrics
- Gross NPA: 2.1%
- Net NPA: 0.3%
- Micro-banking Collection Efficiency: 99.7%
- CASA Ratio: 26%
What to track next
The bank’s ability to manage margins amid rising interest rates and the successful execution of its transition to a higher share of secured loans will be critical indicators for future quarters.