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earnings | IST

Ujjivan SFB expects to restructure 7-8% loans by Q2FY22

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Ujjivan Small Finance Bank reported earnings for the June-ended quarter. Nitin Chugh, Managing Director and CEO at Ujjivan Small Finance Bank, discussed the earnings fineprint.

Ujjivan Small Finance Bank reported earnings for the June-ended quarter. The bank saw a net loss of Rs 233 crore for the first quarter ended June 30 and the highest ever gross NPA ratio even after the big write off that it undertook. Its total income during April-June 2021 fell 8 percent to Rs 717 crore, compared to Rs 775 crore in the year-ago period. Net interest income fell 16 percent to Rs 384 crore from Rs 458 crore in the year-ago period. The bank's gross non-performing assets (NPAs) shot up to 9.8 per cent of the gross advances as of June 30, 2021, as against 1 percent at the end of June 2020. Net NPAs, or bad loans, also rose to 2.7 percent from 0.2 percent. Nitin Chugh, Managing Director and CEO at Ujjivan Small Finance Bank, discussed the earnings fineprint.
The bank had planned restructuring, which commenced in the second half of June. “In the month of July, we restructured Rs 500 crore. So our expectation is that around 7-8 percent of the book will get restructured by the end of Q2 and this will be work in progress,” he said.
“As things have improved in the month of July, we are absolutely optimistic that things will look up from now on; customers have started to repay as well,” he shared.
In Kerala, the bank has a very small portfolio of about Rs 210 crore. However, Tamil Nadu and Karnataka have shown a remarkable recovery in the month of July, he stated.
Demand has certainly come back. “If there is demand, if there is good quality credit available, we don’t see any issue with the growth. We have been guiding for about 20-25 percent growth, and I have been maintaining that three good quarters for us will see us through good growth momentum. That is what we saw in the month of July, which is reaffirming the whole hypothesis that growth is not going away,” he explained.
On NPAs, he said that the bank has barely added 40,000 accounts to NPAs versus earlier, when the figures were in lakhs.
In terms of reverse merger timeline, he said, “As of now, based on the last communication that we received from Reserve Bank of India (RBI) at the association was that we can apply three months prior to completing our fifth year, which is around January 31, 2022. We would be making our application to RBI in the first week of November and we are going through a whole lot of procedural formalities and approvals before we do that and after that also, there are several regulatory approvals and milestones to be done. So in all, anywhere between 9 and 12 months is what we expect this whole process to take to get completed.”
(With inputs from PTI)
For the full interview, watch the accompanying video.