Ujjivan Small Finance Bank reported a small rise in net profit for the third fiscal quarter ended December 2023 over the year-ago period while deposit and loan growth remained strong.

The Bengaluru-based small finance bank posted a net profit of Rs 300 crore for the quarter ended December, up 2.34% from Rs 293 crore a year ago.

The lending margin got squeezed amid rise in cost of funds. Net interest margin (NIM) declined by 61 basis points to 8.8% in the December quarter from 9.4% for the same quarter last year.

Net interest income (NII) was up 23% to Rs 860 crore from Rs 697 crore.

Cost of funds increased by 8 basis points in Q3FY24 to 7.5%. 

The small finance bank is on a branch expansion spree, with a focus in the southern states. In the December 2023 quarter, it added 29 branches to take the total count to 729. The plan is to open  23 more branches in the final quarter of FY24 ending March 2024.

The bank’s deposit base grew 28% year-on-year to Rs 29,669 crore. The CASA (current account savings account) ratio stood at 25.5% as of 31 December 2023, up from 24.1% in the prior quarter.

The loan book grew 27% year-on-year to Rs 27,743 crore. The affordable housing loan segment grew 40% year-on-year and constitutes 16% of the bank’s total advances. The micro group loans, which is the largest segment for the bank contributing to 56% of the gross loan book, increased by 21% in the December 2023 quarter over the year-ago period.

Said Ujjivan Small Finance Bank managing director and CEO Ittira Davis, “Our guidance on loan and deposit book growth remains intact. Credit cost will continue to remain within sub 100 bps as per our earlier guidance. In line with our strategy, we will continue to expand our physical presence across the country.”

The bank is in the final stages of merger with its holding company, Ujjivan Financial Services.