A woman holds the loan she has received, a stack of rupee bills, during a meeting organized by SKS Microfinance Ltd. (Photographer: Adeel Halim/Bloomberg)

Ujjivan Financial Services Reports A Net Loss Due To Demonetisation Pain

Ujjivan Financial Services Ltd. reported a net loss and a sharp rise in bad loans in the April-June quarter due to poor recovery of loans during the demonetisation period and higher operating expenses due to its transition from a microfinance lender to a small finance bank.

It reported a wider-than-expected consolidated net loss of Rs 75 crore compared to a profit of Rs 19.4 crore last quarter, according to an exchange filing on Thursday. Bloomberg consensus estimates had pegged the net loss at 7.1 crore. Quarterly results are not comparable on a year-on-year basis since the small finance bank was incorporated in July 2016.

Net interest income grew 7.7 percent sequentially to Rs 138.22 crore.

Provisions rose sharply to Rs 159 crore from a Rs 7.2 crore last quarter. This included an additional provision of Rs 43 crore to cover bad loans from the November-January period, the filing added.

Other Highlights

  • Gross loan book grew 1.25 percent quarter-on-quarter to Rs 6,459.27 crore.
  • Disbursements grew 21 percent to Rs 1,701.9 crore on a sequential basis.
  • Collection efficiency for new business at 99.76 percent for January-June 2017.
  • Gross NPAs stood at 6.16 percent from 0.28 percent last quarter.
  • Cost to income ratio stood at 78 percent versus 76.69 percent last quarter.

Disbursements have exceeded the monthly average clocked in the pre-demonetisation period with normalcy returning across states, Samit Ghosh, managing director and chief executive officer of Ujjivan Small Finance Bank said in the exchange filing.

The company expects the cost-to-income ratio to decline consistently during the year.

Ujjivan Small Finance Bank started operations in February 2017.