Ujjivan Small Finance Bank Q2 FY26 Earnings: Mixed Performance Amid Growth Momentum

Ujjivan Small Finance Bank Ltd. reported a net profit of ₹121.7 crore for the quarter ended September 2025 (Q2 FY26), reflecting a substantial 48% year-on-year decline from ₹233 crore, though this figure surpassed CNBC-TV18's estimate of ₹117 crore. The stock reacted to the news with a modest 1% dip on the BSE. Net Interest Income (NII) stood at ₹921.7 crore, marginally exceeding the expected ₹917 crore, yet lower than the ₹944 crore recorded a year prior. Positively, NII grew 7.7% sequentially to ₹921.7 crore, breaking a three-quarter declining trend. Interest income also rose 6.7% quarter-on-quarter to ₹1,682 crore. Pre-provision operating profit (PPoP) showed sequential strength, increasing 9.6% to ₹395 crore, and profit after tax (PAT) was up 18.2% sequentially. Asset quality witnessed sequential improvement: Gross Non-Performing Assets (NPA) decreased to 2.45% from 2.52% in the preceding quarter, with Net NPA also declining to 0.67% from 0.70%. Micro-banking collection efficiency averaged 99.48%, and slippages dropped to ₹278 crore. The bank demonstrated robust deposit growth, with total deposits reaching ₹39,211 crore, up 15.1% year-on-year. CASA deposits were a highlight, surging 22.1% year-on-year and 14.9% sequentially to ₹10,783 crore, elevating the CASA ratio to 27.5%. The cost of funds eased to 7.3% from 7.6% sequentially. Lending activity hit a high note with the highest-ever quarterly disbursements of ₹7,932 crore, marking a 47.6% year-on-year increase. Strategic portfolio shift continued, with the secured loan book expanding to ₹16,173 crore, now constituting 47% of total advances, up from 35% a year ago. The customer base expanded to 98.8 lakh, up 8% year-on-year. In summary, while year-on-year profitability saw contraction, Q2 exhibited strong sequential growth in NII, PPoP, and PAT, along with improved asset quality and robust business metrics in deposits and disbursements, underscoring ongoing operational momentum.