📷 Image Credits: Mint
Ujjivan Small Finance Bank’s shares plunged by 7.56% to ₹44.70 after the bank revised its loan growth guidance to 20% for FY25, down from the earlier 20%–25%. The increased credit cost guidance to 1.7% was also a factor. The bank cited increased stress in hotspot states such as Punjab, Haryana, Gujarat, UP, and Kerala as the reason behind the adjustments. The focus has shifted towards collections and individual loans for better profitability.
Management highlighted higher credit costs in the microfinance segment, particularly in certain states like Punjab, Haryana, Gujarat, and UP. The decision to slow down disbursements was made in response to stress building up from Q2 FY24. The bank aims to grow individual loans, affordable housing, and transition group loan customers to reduce interest costs and enhance profitability.
Despite challenges, Ujjivan remains optimistic about its future growth prospects. The bank is looking to increase the share of its secured book to 40% and has begun offering gold and vehicle loans. Additionally, they meet the RBI’s guidelines for a universal banking license, which would provide various benefits such as capital flexibility and reduced lending requirements.
