Ujjivan Small Finance Bank’s shares has tumbled 8.1 per cent to hit an intra-day low of Rs 28 apiece on the BSE on Wednesday after the lender’s asset quality worsensed in the March quarter. The gross non-performing asset (GNPA) ratio rose from 0.97 per cent last year and 0.96 per cent (4.8 per cent as per pro-forma) in Q3FY21 to 7.1 per cent in the quarter ended March 2021 which worried Street. Net NPA ratio, meanwhile, deteriorated from 0.2 per cent (Q4FY20) and 0.05 per cent (Q3FY21) to 2.93 per cent.

That apart, the lender’s collection efficiency stood lower at 94 per cent in March 2021 for overall loans due to continued stress in Assam, West Bengal, Maharashtra and Punjab, which cumulatively contribute 29 per cent of portfolio. The collection efficiency further fell to 89 per cent in April 2021 due to the lockdowns, while portfolio at risk is 14.9 per cent, indicating continued elevated stress.

Overall, the recognized stress pool is now 11.8 per cent (11.1 per cent in Q3) of loan book. However, restructured MFI loans are now 6.8 per cent of MFI loans (4.7 per cent of overall loans), down from 8.5 per cent in Q3, due to NPA recognition and partial recovery. Besides, the bank wrote off just Rs 74 crore in FY21 (0.5 per cent of loans) unlike aggressive write-off by peers.

Stock Covered in the news

Ujjivan Small Finance Bank-View Detailed Analysis