{"id":155452,"date":"2023-10-30T06:46:50","date_gmt":"2023-10-30T10:46:50","guid":{"rendered":"https:\/\/44.250.171.167\/?p=155452"},"modified":"2023-10-30T06:46:51","modified_gmt":"2023-10-30T10:46:51","slug":"ujjivan-small-finance-bank-limited-q2-fy24-earnings-conference-call-insights","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/ujjivan-small-finance-bank-limited-q2-fy24-earnings-conference-call-insights\/","title":{"rendered":"Ujjivan Small Finance Bank Limited Q2 FY24 Earnings Conference Call Insights"},"content":{"rendered":"<p><strong>Key highlights from Ujjivan Small Finance Bank Limited (UJJIVANSFB) Q2 FY24 Earnings Concall<\/strong><\/p>\n<ul>\n<li><strong>Business Performance and Growth<\/strong>\n<ul>\n<li>Disbursements grew 18% year-on-year to INR 5,749 crores.<\/li>\n<li>Gross loan book increased 27% year-on-year and 5% quarter-on-quarter.<\/li>\n<li>Total deposits grew 43% year-on-year and 9% quarter-on-quarter to INR 29,139 crores.<\/li>\n<li>Added 39 new branches, taking total to 700.<\/li>\n<li>Asset growth driven by MicroBanking, affordable housing and FIG.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Affordable Housing Performance and Expansion<\/strong>\n<ul>\n<li>Affordable housing constitutes 15% of the bank&#8217;s total gross loan book, with INR541 crores disbursed in the last quarter.<\/li>\n<li>The business is moving towards a hub-and-spoke model, adding 10 new hubs in the recent quarter to improve operational efficiency and reduce costs.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Secured Loan Portfolios and FIG Growth<\/strong>\n<ul>\n<li>Individual loans are growing faster, and existing group loan borrowers are transitioning to individual loans.<\/li>\n<li>The bank expects mature individual loan borrowers to shift to secured loan portfolios like Micro &#8211; LAP and affordable housing, further enhancing growth opportunities.<\/li>\n<li>FIG disbursed INR293 crores, a 39% year-on-year increase, focusing on good quality NBFCs with stable collections.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Digital and Retail Initiatives<\/strong>\n<ul>\n<li>The bank is enhancing its analytics to facilitate customer transition to secured loans and to explore cross-selling and upselling opportunities.<\/li>\n<li>The Hello Ujjivan app is gaining acceptance, with plans to introduce a repeat loan facility to reduce branch visits and costs.<\/li>\n<li>CASA crossed INR7,000 crores, growing 28% year-on-year, and retail term deposits increased by 56% year-on-year.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Asset Quality Remains Strong<\/strong>\n<ul>\n<li>GNPA at 2.2% versus 2.4% in June.<\/li>\n<li>NNPA remains negligible at 0.09%.<\/li>\n<li>Collections strong with 98.3% up to 1 EMI collection efficiency.<\/li>\n<li>Slippages lower at INR 113 crores versus INR 103 crores in Q1.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Yield Trends Across Segments<\/strong>\n<ul>\n<li>MSME yield decline due to low disbursements during transition.<\/li>\n<li>Affordable housing yields largely flat.<\/li>\n<li>Microbanking yields to increase with upcoming repricing.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Guidance on Credit Costs and ROE<\/strong>\n<ul>\n<li>Credit cost guidance of &lt;100 bps for FY24.<\/li>\n<li>Normalized credit cost of 125-150 bps.<\/li>\n<li>ROE guidance of 20% plus for FY25 and FY26.<\/li>\n<li>ROE guidance of 22% for FY24.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Trends in Individual Lending<\/strong>\n<ul>\n<li>Average ticket size largely flat quarter-on-quarter at about INR 131,000.<\/li>\n<li>EPS decline possibly due to lower yields.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Repricing of Assets<\/strong>\n<ul>\n<li>Expects repricing of assets to occur, particularly in the MicroBanking book, where 53% is yet to be repriced.<\/li>\n<li>The repricing will be gradual, with 28% of the book getting a 50 basis-point adjustment and the remaining 25% seeing a 100 basis-point adjustment over the next 3-4 quarters.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Opex Trends<\/strong>\n<ul>\n<li>Reduction in off-roll collection staff due to improving asset quality.<\/li>\n<li>Increase in on-roll staff for secured loan collections and new branches.<\/li>\n<li>Costs in line with projections, new branches to bring business.<\/li>\n<li>Cashless collections increased to 37% from 20% last year.<\/li>\n<\/ul>\n<\/li>\n<li><strong>New Customer Acquisition<\/strong>\n<ul>\n<li>Added 5.3 lakh in H1, marginally below 3 lakhs per quarter.<\/li>\n<li>Slower growth compared to last year due to regulatory changes.<\/li>\n<li>New branches will boost acquisition going forward.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Group Loan Growth Outlook<\/strong>\n<ul>\n<li>Lower in Q1\/Q2, picks up in Q3\/Q4 seasonally.<\/li>\n<li>Impacted by floods in some geographies in Q2.<\/li>\n<li>Expect pickup in disbursements and loan growth in Q3 and Q4.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Andhra Pradesh Market Entry<\/strong>\n<ul>\n<li>Soft launch and starting with liability business.<\/li>\n<li>Microbanking not in focus currently.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Margin Outlook and Market Share<\/strong>\n<ul>\n<li>Yield may decline as secured loans increase, but CASA may offset this partly for MSME.<\/li>\n<li>As rates fall, margin should remain healthy.<\/li>\n<li>Market share growing faster than industry in key states.<\/li>\n<li>New clients have no prior NPA history.<\/li>\n<li>Marketing costs should reduce going forward.<\/li>\n<li>Board to consider applying for universal bank license.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Impact of Reverse Merger<\/strong>\n<ul>\n<li>Addition of over INR 400 crores to equity net worth.<\/li>\n<li>Reduction of 2.82 crore shares from total base.<\/li>\n<li>Expected to add over INR2.4 to book value.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Key highlights from Ujjivan Small Finance Bank Limited (UJJIVANSFB) Q2 FY24 Earnings Concall Business Performance and Growth Disbursements grew 18% year-on-year to INR 5,749 crores. Gross loan book increased 27% year-on-year and 5% quarter-on-quarter. Total deposits grew 43% year-on-year and 9% quarter-on-quarter to INR 29,139 crores. Added 39 new branches, taking total to 700. Asset [&hellip;]<\/p>\n","protected":false},"author":1767,"featured_media":154818,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9825,392,1],"tags":[8249,10169],"class_list":["post-155452","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-earnings-call-highlights","category-earnings","category-finance-stocks","tag-banks","tag-earnings"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2023\/10\/CC_Image_1.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":155269,"url":"https:\/\/alphastreet.com\/india\/icici-bank-limited-q2-fy24-earnings-conference-call-insights\/","url_meta":{"origin":155452,"position":0},"title":"ICICI Bank Limited Q2 FY24 Earnings Conference Call Insights","author":"Praveen","date":"October 25, 2023","format":false,"excerpt":"Key highlights from ICICI Bank Limited (ICICIBANK) Q2 FY24 Earnings Concall Loan Growth And Credit Quality Domestic loan portfolio grew 19.3% year-on-year and 4.8% sequentially at September 30, 2023. 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