Ujjivan Fin sees loan book growing 35-40% for FY17

Below is the verbatim transcript of Sudha Suresh's interview to Latha Venkatesh & Sonia Shenoy.

Latha: Take us through whether this performance can be maintained. It is a very good asset growth that you have seen. What maybe the targets for the full year?

A: We have had an excellent quarter one and this has been fuelled both by the increase in the momentum of business, increase in productivity and also some reduction in other costs. So overall we have seen an excellent profit for Q1. 

However, in terms of loan book growing, we are assured of a steady loan growth book throughout the next few quarters and we see the increase both in microfinance business as well as in our micro, small and medium enterprises (MSMEs) and housing business, in fact as indicated in our plan, we are focusing on MSME and housing and we can see that slightly in terms of the ratio to the overall portfolio, the microfinance portfolio which stood at about 88 percent, is now about 86 percent and MSME and housing business which was closer to 11.6 percent, has moved to 13.4 percent of the overall portfolio. So we are moving on the right trajectory and we would be maintaining a good growth in the forthcoming quarters also.

Sonia: When you say good growth, can you give us some numbers because your loan book currently is about Rs 5,600 crore which is a growth of 60 percent year-on-year that you have seen. What will your loan book look like over the next six months?

A: We are looking, from our March numbers, at least a growth of about 35-40 percent and that is what we mean by steady growth.

Latha: What is your plan to get into the small bank business; the timetable, at what point you are going to implement your licence and at that point what maybe your bank liabilities. How much of deposits will you have?

A: On the plans of SSB, we are looking at the possibilities in the first quarter of the next calendar year. Our SSB plans are on track in terms of the implementation be it in terms of IT technology, in terms of HR and all other functional implementations. We are going at a good momentum on the transformation parts to SSB.

In terms of portfolio growth, as much as I indicated that there will be a steady growth. We are also looking at a possibility of securitisation closer to Q3 and that will reflect on what are the on book assets that we have closer to when we become a bank. Therefore, we may look at significant amount of securitisation and therefore to that extent the net portfolio may reflect a lower number.

Anuj: Two numbers which stood out for me, your net interest margin going up to 13 percent from 11.5 percent and cost to income ratio of 45 percent versus 54 percent. At what ratios will this stabilise, at what numbers?

A: Right now in Q1, we haven't seen the full impact of the small finance bank related expenditure coming in, be it capex or revenue expenditure. We do intent to have some more of the SFB capex and revenue expenditures flowing in in the forthcoming quarters and based on that you will see the cost of income ratio may not be at 45 percent, which has been an indicated in the first quarter but we would definitely see an increase there in the forthcoming three quarters.