Shares of Ujjivan Financial Services Ltd. fell as much as 6.2 percent on Friday, the most in five months, after the company reported weak results for the fourth quarter ended March.
The company's net profit declined 56 percent sequentially to Rs 19.4 crore, according to its media release. Income earned from interest too fell 35.5 percent to Rs 128.3 crore.
The note ban announced in November hurt the lender's ability to recover its loans. “We are still recovering from the portfolio issues related to demonetisation,” Samit Ghosh managing director and chief executive officer of its wholly owned subsidiary Ujjivan Small Finance Bank said in the release.
The company had hinted at slower growth though. After its third quarter results, Managing Director and Chief Executive Officer Sudha Suresh had told BloombergQuint that it expects normal business to resume only in the next financial year.
Disbursements made by the lender declined 15.4 percent over the quarter, while its loan book saw a 3 percent de-growth.
Ujjivan Financial Services, now a non-operative holding company, till three months ago was a microfinance company. Ujjivan Small Finance Bank began banking operations in February.
The transition to a small finance bank increased operational costs and impacted the fourth quarter profits, Suresh said in the statement on Thursday.
We expect the impact of the higher operating expense and credit costs to continue for the next couple of quartersSudha Suresh, Chief Executive Officer, Ujjivan Financial Services
Operating costs for the company went up 16.7 percent sequentially to Rs 1,362.5 crore. Its operating profit before provisioning for stressed assets fell 65.5 percent.
The company’s stock has lost almost 14 percent since demonetisation was announced. It closed 5.4 percent lower on Friday, as compared to a 0.4 percent fall in the benchmark S&P BSE Sensex Index.