In its earnings report for the fourth quarter of fiscal year 2025, Ujjivan Small Finance Bank reported a net profit of ₹83.4 crore. This was a notable decline of 74.7% year-on-year when compared to ₹329.6 crore in Q4 FY24, but it closely aligned with the expectations set by CNBC-TV18’s poll estimate of ₹80.3 crore. Despite the drop in earnings, the bank has maintained a solid position in the market. This decline was primarily attributed to increased provisioning and moderation in interest income, a consequence of a changing business mix.

Net Interest Income (NII) and key financial metrics for Q4 FY25
The bank's Net Interest Income (NII) stood at ₹864.4 crore, which was marginally below the market's expectations of ₹865 crore. This figure also marked a 7.4% decline from ₹933.5 crore in the same quarter of the previous year. NII is a crucial measure of a bank’s ability to generate income from its core lending operations, and this reduction reflects some pressure on the bank’s traditional business model.

Improvement in asset quality
On a more positive note, the bank’s asset quality improved sequentially. The Gross Non-Performing Assets (GNPA) reduced to 2.18% from 2.68% in the previous quarter, signaling that Ujjivan SFB is managing its non-performing loans better. Similarly, Net NPA improved to 0.49% from 0.56%. This can be attributed to the bank’s strategic focus on strengthening its secured loan book and tightening collections. The Provision Coverage Ratio (PCR) remained healthy at 78%, supported by accelerated provisioning of ₹46 crore during the quarter.

Deposits growth and CASA momentum
Ujjivan SFB experienced significant growth in its total deposits, which increased by 20% year-on-year, reaching ₹37,630 crore. The bank’s Current Account and Savings Account (CASA) ratio also showed a strong performance, increasing by 43 basis points quarter-on-quarter to stand at 25.5%. This was driven by strong momentum in CASA, which is an important indicator of a bank’s liquidity and ability to mobilize low-cost funds.

Growth in loan book and strategic focus on secured loans
The gross loan book of Ujjivan SFB reached ₹32,122 crore, marking a 5% sequential growth and an 8% year-on-year growth. One of the key strategic developments for the bank in FY25 was the substantial increase in its secured loan portfolio, which grew from 30% to 44% of the total loan book as of March 2025. This shift towards secured loans not only strengthens the bank’s asset base but also reduces credit risk, improving overall financial stability.

Record disbursements in Q4 FY25
Ujjivan SFB also achieved a record-high loan disbursement of ₹7,440 crore during Q4 FY25, marking a 39% increase from the previous quarter. The growth was particularly driven by strong performances in micro-banking and individual loan segments, which represent critical areas of the bank’s business strategy. This impressive disbursement figure reflects the bank's robust growth in its loan origination efforts.

Full-year financial performance and profitability metrics
For the full fiscal year FY25, the bank reported a Profit After Tax (PAT) of ₹726 crore, which marked an 11% increase from the previous year. Its total income for FY25 stood at ₹7,201 crore. The Return on Assets (RoA) and Return on Equity (RoE) were reported at 1.6% and 12.4%, respectively. Despite the drop in Net Interest Margin (NIM) to 8.8% from 9.1% in FY24, the bank’s overall profitability remained stable. The decrease in NIM was primarily due to the change in the product mix, especially as the bank expanded its secured loan book.

Liquidity management
The bank managed its liquidity effectively, despite facing pressure from the broader banking system. It maintained a Credit-to-Deposit ratio of around 85% and an average daily Liquidity Coverage Ratio (LCR) of 120% during the quarter. These liquidity metrics reflect the bank’s strong capacity to meet its financial obligations, even under challenging market conditions.

Strategic direction and future plans
Sanjeev Nautiyal, the Managing Director and CEO of Ujjivan Small Finance Bank, stated that FY25 was a pivotal year for the bank, as it achieved several important strategic goals, including a significant rise in secured loans and improvements in asset quality. Nautiyal also mentioned that the bank had submitted an application to the Reserve Bank of India for a transition to a universal banking license, which underscores Ujjivan SFB’s ambitions for further expansion and growth. This move to a universal banking license is a critical step in Ujjivan SFB's long-term strategy to diversify its operations and deepen its market penetration.

Stock market performance
Despite the solid fundamentals and strategic growth of the bank, Ujjivan Small Finance Bank’s shares were trading down over 4% at ₹42.11 on the Bombay Stock Exchange (BSE), possibly reflecting investor concerns regarding the declining profit figures and broader market conditions.

Conclusion
Ujjivan Small Finance Bank’s Q4 FY25 results illustrate a story of both challenges and strategic progress. While the bank’s profitability faced pressure due to increased provisioning and a changing business mix, it has shown strong growth in deposits and loan disbursements, alongside improvements in asset quality. With an ambitious strategic vision for the future, including a potential shift to universal banking, Ujjivan SFB’s growth trajectory remains positive despite some market turbulence.

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