Ujjivan Small Finance Bank Ltd (UJJIVANSFB) Q1 FY27 Earnings Call: Raises ROA Guidance to 1.8-2.0%, Gold Loan Surges 249%

Ujjivan Small Finance Bank Ltd held its Q1 FY27 earnings call on July 23, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Core Financial Performance — Record Profit, Stable NIM

• PAT of Rs.317 Cr in Q1 FY2026-2027, translating to ROA of 2.2% and ROE of 18.2%.
• Net Interest Margin stable at 8.5% with cost of funds declining to 6.86%.
• Gross loan book reached Rs.42,903 Cr (up 28.9% YoY), with secured loans now representing 50.4% of the portfolio.
• Deposits grew 25% YoY to Rs.48,129 Cr; CASA deposits rose 37.8% YoY to Rs.12,930 Cr.
• GNPA improved 10 bps to 2.17% with provision coverage ratio strengthening to 85%.

Secured Mix Shifts Higher, Gold Loan Surges 249% YoY

• Secured loan book at Rs.21,638 Cr (+42.7% YoY) now constitutes 50.4% of total loans; management targets 56% secured mix by March 2027 (end of FY2026-2027).
• Gold loan book surged 248.6% YoY to Rs.1,020 Cr, with new-to-bank customers at 40% in Q1 FY2026-2027; active gold branches to reach ~575 by Q4 FY2026-2027 from ~420-440 currently.
• Affordable housing & micro-mortgages grew 40.8% YoY to Rs.11,210 Cr; micro-mortgage book at ~Rs.1,800 Cr with healthier yields of ~19.5%.
• MSME book up 54% YoY to Rs.3,470 Cr; management deliberately increased ticket sizes in Q1 FY2026-2027 (LAP to Rs.80-90 lakhs, working capital to Rs.1.1-1.2 Cr).
• Vehicle loans rose 85.1% YoY to Rs.1,036 Cr; pre-owned car pilot completed, to test in 2-3 geographies during FY2026-2027 and scale in FY2027-2028.
• Microbanking book at Rs.21,371 Cr (+16.8% YoY); growth guided at 10-15% (period unspecified), with branch expansion focused on UP, Rajasthan, and Bihar.
• 144 new branches targeted for FY2026-2027; 38 already opened, 106 more to be added.

Collections Remain Strong, Credit Cost Guidance Lowered

• Bucket X collection efficiency at 99.7% in Q1 FY2026-2027, consistent across all states; July trends remained similar.
• Annualized slippages improved to 1.72% in Q1 FY2026-2027 from 2.68% in Q4 FY2025-2026.
• Credit cost guidance revised to 0.9%-1.0% of average total assets for FY2026-2027 (from earlier higher levels); Q1 FY2026-2027 credit cost on microfinance was 1.9%.
• Provisions held at Rs.657 Cr; MFI provision coverage ratio at ~95.1%.
• Micro-mortgage PAR increased from 1.2% to 1.5% and NPA from 0.47% to 0.55%, though on-time repayment remains at 95% and bucket-X collection at 99.7-99.75% over the last 24 months.
• Microfinance over-leverage (4+ lenders) now below 1.5%; portfolio fully stabilized.
• Micro-mortgage book is only 3 years old and naturally maturing; 18-24 MOB vintage losses not above 2.5%.

NIM Steady, Opex Guided Lower with Rs.250 Cr Capacity Spend

• NIM guidance for FY2026-2027 consistent with Q1 level of 8.5%, supported by stable MFI yields and higher-yielding segments (gold, two-wheeler, used car, micro mortgage).
• Cost of funds at 6.86% in Q1 FY2026-2027; CFO Sadanand Kamath stated repricing benefit "almost" complete, with cost of funds expected at current levels or "slightly elevated."
• Opex guided at ~6.4% of average assets for FY2026-2027, lower than previous plan; year-on-year improvement in cost-to-assets expected after FY2026-2027.
• Rs.250 Cr capacity building spend in FY2026-2027 (branches, branding, tech, analytics) — minimal in Q1, ramping up in subsequent quarters; already factored into ROA guidance.
• Fee income (insurance) grew ~50% YoY in Q1 FY2026-2027; management expects to maintain similar growth going forward.
• ROA guidance raised to 1.8%-2.0% for FY2026-2027, incorporating the Rs.250 Cr spend and improved credit cost outlook.

CASA Surges, Liability Franchise Strengthens

• CASA deposits up 37.8% YoY to Rs.12,930 Cr; management targets CASA ratio of ~30% by end of FY2026-2027.
• Bulk deposit ratio targeted at ~30%; retail term deposits are currently cheaper than bulk term deposits.
• Liability-only customers at 53 lakhs — nearly all with savings accounts (no standalone term deposit customers).
• FCNR raised Rs.60 Cr in Q1 FY2026-2027; management confident of achieving earlier guided target.
• Liability strategy focused on top 8 and top 30 markets, delivering ~75% YoY CASA growth and 36% overall growth, with segmental focus on HNI, NR, TAS, and corporate salary customers.
• No immediate deposit rate hikes planned; only marginal increase in cost of funds expected, already baked into FY2026-2027 ROA guidance.

Guidance Revised Up, New Initiatives in Motion

• Asset growth target maintained at ~25% for FY2026-2027, with full-year ROA guidance raised to 1.8%-2.0%.
• Gold loan capacity expansion: 250 branches in FY2026-2027, all ~800 branches by FY2027-2028; monthly disbursement exit rate of ~Rs.230-250 Cr targeted by Q4 FY2026-2027.
• New initiatives launched: unsecured fast-track digital loan (post-pilot), pre-owned car loans (Karnataka pilot), mid-corporate lending, and purchase invoice discounting for MSME.
• Affordable housing capacity at Rs.250-375 Cr/month; micro-mortgage run-rate expected to reach ~Rs.140-150 Cr/month by March 2027 (end of FY2026-2027).
• MSME ticket size increases (LAP to Rs.80-90 lakhs, working capital to Rs.1.1-1.2 Cr) expected to continue in FY2026-2027; further increases may be considered in FY2027-2028.
• Key risks cited by management: geopolitical uncertainty in West Asia, weather/El Niño impact on Kharif sowing, continued competition in deposit mobilization and asset pricing pressures.