Ujjivan Small Finance Bank says need to be prepared for pressure on margins
Ujjivan Small Finance Bank released its Q3FY23 business update, and the bank has seen robust disbursals but failed to translate into higher asset under management (AUM) growth. However, the bank’s asset quality continues to improve.
Ujjivan Small Finance Bank released its third quarter (Q3FY23) business update, and the bank has seen robust disbursals but failed to translate into higher asset under management (AUM) growth. However, the bank’s asset quality continues to improve.
Ittira Davis, the MD and CEO of Ujjivan Small Finance Bank, appeared on CNBC-TV18 to discuss the state of the bank. He acknowledged that the bank will have to be prepared for some pressure on net interest margins (NIMs), but assured that they will take a decision on hiking lending rates after the Reserve Bank of India's policy.
In the past two months, Ujjivan Small Finance Bank has raised deposit rates ahead of its competition. Davis expects this move to lead to further improvement in asset quality in the fourth quarter of the fiscal year 2023.
“Our deposit growth has been done in a way that we anticipated this growth in demand for loans. And we had prepared ourselves for that. So, we were one step ahead perhaps of the market and we have seen 49 percent growth in our deposit base, which is quite phenomenal at this stage of the interest rate cycle,” he said.
Despite the challenges facing the bank, Davis emphasized that their process for collections is robust and that they have seen five continuous quarters of growth. In fact, the bank has seen a 33 percent year-on-year (YoY) growth in outstanding loans.
Overall, Davis remained positive about the future of Ujjivan Small Finance Bank and its ability to weather any economic storms.
The RBI approved reappointment of Ittira Davis as Managing Director and Chief Executive Officer of the Ujjivan SFB for a further period of 2 years.
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