Indian two thousand and five hundred rupee banknotes are arranged for a photograph in Mumbai, India (Photographer: Dhiraj Singh/Bloomberg)  

Q1 Results: Ujjivan Financial Services’ Cost-To-Income Ratio Jumps

Ujjivan Financial Services Ltd.’s cost-to-income ratio jumped as the microlender added new branches and increased manpower.

Its cost-to-income ratio rose to 72.3 percent in the quarter ended June from 57 percent in the previous three months, according to its statement to exchanges. The ratio is a measure of profitability—the lower it is, the more profitable is a lender.

Ujivan Financial Services added 88 full-service banking outlets during the quarter, taking the total to 275, according to its investor presentation. It targets more than 400 branches to be operational by March 2019, Managing Director and Chief Executive Officer Ittira Davis told BloombergQuint in an interaction. The cost-to-income ratio will stabilise around 55 percent in two-three years, he said.

Key Earnings Highlights

  • Net interest income rose 61 percent from last year to Rs 222.4 crore.
  • Net profit stood at Rs 45 crore compared with a loss of Rs 74.9 crore a year ago.
  • Provisions came in at Rs 15.1 crore against Rs 34.7 crore in the previous quarter.
  • Gross non-performing assets stood at 2.7 percent compared with 3.6 percent in the preceding quarter.
  • Net NPA stood at 0.3 percent against 0.7 percent in the preceding quarter.

Shares of Ujjivan Financial Services fell as much as 3.6 percent in early trade.

Here’s what the company’s management had to say about its earnings: