Stocks in Focus: Bangalore-based Small Finance Bank Approved to Sell Its Non-Performing Assets (NPA) and Written-Off Loans, Stock Closed 1.17 Per Cent Lower
Small Finance Bank Shares in Focus After Approval to Sell Rs 364.51 Crore Micro Banking Loan Pool
Ujjivan Small Finance Bank has approved the sale of a Rs 364.51 crore micro banking loan pool to an Asset Reconstruction Company (ARC) to enhance asset quality and financial stability. The loan pool comprises Rs 294.51 crore in non-performing assets (NPAs) and Rs 70 crore in technically written-off loans. Following this announcement, shares of Ujjivan Small Finance Bank closed 1.17 per cent lower on Monday, February 24, at Rs 31.97.
The bank's authorized board committee approved this move to strengthen financial health. Ujjivan SFB carries an overall provision of 66.51 per cent on this loan pool.
Key Transaction Details:
- Pool Size: The micro banking pool consists of Rs 364.51 crore, including Rs 294.51 crore in NPAs (DPD 150+) and Rs 70 crore in technically written-off loans.
- Provisioning: The bank holds an overall provision of 66.51 per cent on this pool.
- Approval Date: The board sanctioned this sale on Friday, February 21.
DSIJ’s 'Tiny Treasure' service recommends researched Small-Cap stocks with Inherent Growth Potential. If this interests you, do download the service details here.
These bad loans originate from the bank's microfinance portfolio. As of 9:30 AM, Ujjivan Small Finance Bank shares were trading at Rs 31.79 per share on the National Stock Exchange, dropping 1.73 per cent. The stock had reached its 52-week low of Rs 30.88 on January 28, 2025.
The bank's asset quality weakened in the October-December quarter of FY25, with gross NPAs increasing to 2.68 per cent of gross advances, up from 2.18 per cent in Q3FY24. Net NPAs also rose to 0.56 per cent from 0.17 per cent a year ago. Excluding tax and contingencies, provisions surged to Rs 223 crore, compared to Rs 63 crore in the corresponding quarter of FY24. Due to these rising provisions, the bank reported a 64 per cent year-on-year (YoY) decline in net profit, amounting to Rs 103 crore in Q3FY25 versus Rs 300 crore in Q3FY24. However, total income rose to Rs 1,763 crore in Q3FY25, up from Rs 1,655 crore in Q3FY24. The capital adequacy ratio stood at 23.90 per cent as of December 2024, slightly lower than 24.37 per cent a year earlier. Gross Loan Book: Stood at Rs 30,466 crore, growing 9.8 per cent YoY and 0.4 per cent quarter-on-quarter (QoQ). The secured loan book made up 39.3 per cent of the total loan book, up from 28.3 per cent in December 2023 and 34.9 per cent in September 2024.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice.