MC Interview: According to the MD and CEO, Ujjivan SFB aims for a 25% total increase in FY24

 MC Interview: According to the MD and CEO, Ujjivan SFB aims for a 25% total increase in FY24

According to MD, the bank's most successful business was the housing sector, with tier II cities driving demand. The bank hopes to return its net interest margin (NIM) to nine percent by the end of Q3FY24, given the consistent growth.

By the conclusion of the third quarter of FY24, we want to get NIMs back up to 9%."

In the second half of the financial year (FY) 2023–2024, Ujjivan Small Finance Bank anticipates an overall rise of 25 percent, according to Ittira Davis, the MD and CEO. Following the bank's July–September FY24 quarter results, Davis stated in an exclusive interview that the bank had seen strong growth in the first half of FY24 and would continue to see growth in the second half.

According to Davis, "we have seen a good growth level up to this point in FY24, and an overall growth of 25% can be easily achieved."

Furthermore, the bank hopes to reach a nine percent net interest margin (NIM) by the conclusion of the FY24 October–December quarter. The bank's NIM is 8.8 percent at the moment.

"This quarter's cost of capital has been somewhat higher than it was last quarter. The market's need for deposits is somewhat to blame for it. By the conclusion of the third quarter, we are quite sure that we will be able to return to the nine percent mark, Davis added.

Revised passages:

How would you rate your Q2 business?

The company has proceeded according to our strategy, and the expansion in the loan book and the deposits have both gone well. More crucially, in a very competitive sector, the deposits have gone really well. The most significant thing is that profitability has continued.

You intended to pursue an aggressive business strategy in the affordable housing market. How does it function?

This quarter, affordable housing has taken center stage, and we've done really well. We updated the business plan last year, and it is working. These asset centers, which provide a hub and spoke approach, are dispersed over diverse areas.

We are now spending more in non-metropolitan areas. Some of these asset centers are really located in tier 2 and tier 3 cities, such as Tumkur, Coimbatore, and Mysore.

A lot of banks saw some pressure on their NIMs in Q2FY24. How would you rate the NIMs for your bank?

In comparison to the previous quarter, the cost of capital has been somewhat higher this quarter. The market's need for deposits is somewhat to blame for this. However, we've added a few additional features and goods to different sections of our deposit campaign.

By doing this, we aim to return NIMs to the nine percent range by the end of FY24's third quarter.

Which parts, other from your MFI book and affordable housing, are successful for you?

We have established new products for our MSME company in addition to a few partnerships with fintechs. We have established new business partnerships in the areas of auto and house financing.

How does your online company operate?

All things considered, we introduced new products throughout the quarter, and the digital savings account will follow shortly. In the next year, we want to consider incorporating more capabilities into our digital services.

What is the current status of your application for a universal banking license? When do you intend to carry it out?

We are now concentrating on our reverse merger, which we may complete during the remaining months of this fiscal year. Following that, the board will determine whether it is appropriate to pursue a universal bank license. Yes, it's still a concern for us.

Finally, for the remainder of FY24, what is your total growth target?

Our books on microbanking and affordable housing have done well and will continue to expand. Therefore, we anticipate growth of around 25% total, which we believe is doable.