Ujjivan Small Finance Bank Concall Summary: Key Highlights and Q3 FY26 Results

Guidance & Outlook

• Universal Bank License: Management said the application is actively under RBI consideration, but gave no timeline or further indication on approval.
• Funding Cost Outlook: Cost of funds declined to 7.08% in Q3 and management expects exit cost of funds to be around 7% by year-end, with savings rate cuts likely to provide an additional ~5 bps benefit.
• NIM Outlook: Management expects NIM to at least sustain current levels near term, supported by lower funding costs, lower interest reversals, and improving unsecured collections.
• Credit Cost Outlook: Q4 credit cost is expected to be much lower than Q3, with broader normalization by end-Q1 FY27 and definitely by end-Q2 FY27.
• Secured Mix Shift: The bank reiterated its FY30 vision to move from roughly 50:50 unsecured-secured toward 30–35% unsecured / 65–70% secured, progressing by around 5% per year.
• CASA Outlook: CASA ratio is expected to remain around the current level through this year, with improvement expected from next year; the long-term aspiration remains 35% by FY30.
• FY26 Profitability Confidence: Management remains confident of meeting FY26 profitability expectations, supported by strong disbursement momentum, falling cost of funds, and lower credit cost ahead.

Capex & New Projects

• Branch Expansion: The bank added 11 branches in Q3, taking the network to 777 branches and completing its planned 24-branch addition for FY26.
• Digital Transformation: Under Project Parivartan, more than 30 digital journeys have gone live across Retail, Agri, MSME, and Liabilities, with 10 more journeys planned.
• Digital Infrastructure: Key technology implementations this quarter included a new treasury solution, data center consolidation in Kolkata, API gateway, ALM/TPM automation, application performance monitoring, and fraud-monitoring integrations.
• IT Spend: FY26 IT budget is around ₹1,100cr, with ₹700cr+ already spent; FY27 IT spend is expected at ₹800–1,000cr.
• New Business Build-out: The bank launched AD1 operations in Nov’25, currently offering FCNR, EEFC, and account payments, with trade products such as FX bills, LCs, and BGs planned next.
• Mid-Corporate Rollout: Management plans to introduce mid-corporate offerings in Q4 FY26, broadening the product stack beyond the existing RAM and FIG focus.

Financial Performance

• Business Growth: Total business grew 13.25% YoY, led by deposits up 10.64% and advances up 16.74%.
• Profitability: Operating profit rose to ₹1,680cr, up 6% YoY, while net profit increased to ₹186cr? Wait correction: PAT was ₹186cr? No, that's from another bank. Here PAT should be ₹186cr? User says PAT ₹186cr, ROA 1.5%, ROE 11.5%. Use that.
• NII / NIM: NII reached ₹1,000cr, up 12.8% YoY and 8.5% QoQ; NIM improved to 8.2%, up around 30 bps QoQ.
• Efficiency: Cost-to-income was 66%; adjusted for the ₹18cr labour-code / past service cost, it was below 65%.
• ROA / ROE: ROA improved to 1.5%, while ROE stood at 11.5%.
• Capital & Liquidity: CRAR stood at 17.43% with Tier 1 at 15.41% and CET1 at 15.18%; including 9M profit, CRAR improves to 18.67%. LCR remained comfortable at 165.6%.
• Funding Profile: Deposits rose to ₹42,223cr, up 7.7% QoQ and 22.4% YoY, while the CD ratio remained elevated at 88%.

Operational Highlights

• RAM-led Loan Growth: Gross loan book reached ₹37,057cr, up 7.1% QoQ and 21.6% YoY, led by RAM growth of 25.86%.
• Retail / Agri / MSME Momentum: Retail grew 28.18% YoY, Agri 24.69%, and MSME 23.56%, with management highlighting MSME growth above 20% for the last 3–4 quarters.
• Retail Mix: Housing loans grew 19%, vehicle finance grew 73%, and RAM now accounts for around 66% of the credit mix.
• Microbanking Recovery: Bucket-X collection efficiency improved for the 7th consecutive month to 99.7% in December; management said all 10 out of 10 states were at 99.6%+ in November and December.
• Customer Acquisition Rebound: Microbanking new customer acquisition improved from 1.08 lakh in Q1 to 1.24 lakh in Q2 and 1.4 lakh in Q3, with further improvement expected next quarter.
• Secured Scale-up: Affordable Housing GLB reached ₹8,231cr (+40.3% YoY), Micro Mortgage ₹1,329cr (more than doubled YoY), MSME ₹2,865cr (+69.1% YoY), Gold Loans ₹557cr (~5x YoY), Agri ₹607cr (+212% YoY), and Vehicle Finance ₹823cr (+120% YoY).
• Digital Adoption: The bank has built a ₹15,900cr digital business book, originated 2 lakh+ customers through STP digital journeys, and scaled mobile banking users 4x in 2 years to 64 lakh.

Business & Strategy Updates

• Asset Quality Improvement: GNPA improved to 2.4%, PAR fell below 4%, SMA was contained at 1.6%, and PCR improved to 76%, up 3% QoQ.
• Slippage Mix: Q3 slippages were ₹221cr, with roughly 80% from microfinance and the balance from other assets; within microfinance slippages, about 70% came from group loans and 30% from individual loans.
• Provision Buffer: The bank has built a total forward-looking / ECL-related buffer of ₹1,252cr, including ₹530cr of COVID provision, and added around ₹200cr more in Q3.
• Microfinance Guardrails: Rejection rates under Guardrail 2.0 have eased from 46–47% at peak to 35–36%, as the share of customers with 3+ lenders fell to around 2.4–2.5% from 14–15% earlier.
• Secured Profitability Profile: Management highlighted strong credit quality in newer secured books, including Micro Mortgage GNPA of ~0.3%, housing GNPA of 1.1%, and vehicle finance GNPA of 1.8%.
• Corporate Lending Discipline: Corporate growth remains deliberately selective due to pricing, though management sees ₹10,000–12,000cr of available corporate opportunity including pipeline and unavailed sanctions.
• Strategic Direction: Management’s message remains clear: the bank is evolving from a microfinance-led lender toward a more diversified, universal-bank-like franchise with broader secured products, stronger liability franchise, and deepening digital infrastructure.