Ujjivan Small Finance Bank has seen an improvement in asset quality over the last few quarters and the bank's MD and CEO, Ittira Davis believes it will improve further in the coming quarters.

“The asset quality is continuing to improve. Based on that, we expect the credit quality and credit improvements to continue. This is an upward, improving trajectory,” he said.

Davis believes the net interest margin (NIM) bottomed out in the second quarter of the financial year 2024 and will now trend upward toward the 9% level helped by various measures including better treasury management.

“...this perhaps is where we would like to call it at the bottom and try to push back NIMs towards the 9% and that is what we are focusing on for quarter three and quarter four,” he told CNBC-TV18.

On October 27, the lender reported a little over an 11% year-on-year (YoY) rise in second-quarter standalone net profit to ₹327.74 crore, slightly higher than Street estimates. A 20 basis points rise in the cost of funds to 7.4% led to a contraction of 40 basis points in the net interest margin to 8.80% for the quarter.

The bank caters to approximately 7.9 million customers through a network of 700 branches and has a workforce of 21,040 employees dispersed across 305 districts in 26 states and union territories throughout India.

The Bengaluru-based bank is expected to complete a reverse merger with its holding company Ujjivan Financial Services (UFSL) in 3-4 months, subject to all the remaining approvals. This merger was announced by the company on October 14, 2022.

As of September 30, the bank's gross loan book totals ₹26,574 crore, while its deposit base amounts to ₹29,139 crore.

Ujjivan SFB shares have decreased by over 11% in the last month.

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(Edited by : Shweta Mungre)