Ujjivan Small Finance Bank Q3 Results: Stock jumps after 71% profit growth, better asset quality

Shares of Ujjivan Small Finance Bank Ltd. surged as much as 7% on Thursday, January 22, after the company declared its December quarter results, that were better on a year-on-year basis.

Net profit for the period grew by 71% from the year-ago quarter to ₹186 crore from ₹109 crore. Part of the profit growth was also aided by higher other income, which grew to ₹295.4 crore from ₹172.1 crore last year.

Net Interest Income (NII) or core income for the lender saw growth of 12.8% from the same quarter last year to ₹1,001 crore from ₹887 crore.

Asset quality improved on a sequential basis with gross NPA improving to 2.38% from 2.45% in September, while Net NPAs stood at 0.57% from 0.67% in September.

Net Interest Margins for the quarter stood at 8.2% at the end of the December quarter from 8.6% last year. The management said that the margins are expected to stabilize in the range of 6% to 7% and that benefit of lower cost of funds will be felt in the coming years.

The company, in its investor presentation, also stated that credit costs will trend lower as the secured book expands and the steady-state credit cost is seen in the range of 1% to 1.5% of average gross loan book.

Shares of Ujjivan Finance Bank are trading 7.1% higher after the earnings announcement at ₹61.85. The stock has risen 80% in the last 12 months.