Ujjivan Small Finance Bank Q2 result: Net profit falls 48% YoY to ₹122 crore; asset quality improves

In the corresponding period of the previous fiscal year, it had clocked a profit of ₹233.03 crore.

On a sequential basis, however, its profit rose 18.2% quarter-on-quarter (QoQ) from ₹103.22 crore in the first quarter of FY26.

The small finance bank witnessed a 2.33% YoY fall in its net interest income (NII), which stood at ₹922 crore during the quarter under review, compared to ₹944 crore in the September quarter of FY25. Its NII grew 7.7% QoQ from ₹856 crore in the June quarter of the same fiscal year.

Its net interest margin (NIM) contracted by 127 basis points (bps)YoY to 7.9% in Q2FY26, as against 9.2% in the second quarter of the previous financial year. However, it expanded by 21 bps QoQ from 7.7%.

The bank’s asset quality improved both annually and sequentially, with gross non-performing asset (GNPA) falling to 2.45% from 2.51% a year ago and 2.52% in the previous quarter (Q1FY26).

Similarly, net non-performing assets (NNPA) also declined, falling to 1.99% from 2.59% in the same quarter of FY25 and 2.29% in Q1FY26.

Commenting on the earnings, Sanjeev Nautiyal, MD & CEO, Ujjivan Small Finance Bank, said: “We have delivered a well-calibrated growth for the quarter by ensuring absorption of excess liquidity, thereby taking our CD ratio to 88.2%. Total deposits were up 1.5% QoQ and up 15.1% YoY at ₹39,211 Cr. CASA grew 14.9% QoQ and 22.1% YoY to ₹10,783 crore, while Retail TD plus CASA deposits remained around 71% of total deposits. Our CASA augmentation efforts are just beginning to take shape. The MF distribution and forex products would be rolled out to customers in Q3, while the future rollout of ASBA will further drive CASA mobilization. We have proactively reset rates in both TD and SA in various buckets, resulting in an improvement in cost of funds by 23 bps QoQ and 17 bps YoY. We expect further CoF benefits in the coming quarters.”

He added that the bank’s loan origination remained strong during the reporting quarter, with one of the highest disbursements of ₹7,932 crore, up 21.3% QoQ and 47.6% YoY. Its gross loan book grew 3.9% QoQ and 14% YoY to ₹ 4,588 crore in Q2FY26.

“As guided, our microfinance portfolio is stabilising with improving repayment behaviour reflected in Bucket X collection efficiency of 99.45% to 99.50% consistently for 3 months of Q2FY26. Our overall asset quality as reflected in credit costs has remained flat at 2.8%, and we remain on track for sequential improvements in the remaining quarters of the financial year,” Nautiyal said.

Ujjivan Small Finance Bank’s return on assets (RoA) and return on equity (RoE) increased sequentially and stood at 1% and 7.7%, respectively. Nautiyal added that “we remain confident to grow advances in FY26 by around 20% with credit costs contained in the range of 2.3% to 2.4% of gross loan book.”

Shares of Ujjivan Small Finance Bank were trading 0.39% lower at ₹48.80 apiece on the National Stock Exchange (NSE) at around 2:19 pm, after the results were announced.

The bank has a total market capitalisation of ₹9,452.89 crore, as of October 17, 2025, according to data on the NSE.