Ujjivan Small Finance Bank announced the successful fundraising of ₹409 crores through a preferential allotment. This move is set to enhance its capital adequacy ratio (CRAR) by approximately 1.2%, bringing it to a pro forma 20.69%. The funds will be raised from marquee investors, including the International Finance Corporation and other leading insurance companies, subject to shareholder approval. This capital infusion is expected to fuel the bank’s strategic growth initiatives and support its expansion plans.
Equity Capital Infusion
Ujjivan Small Finance Bank has successfully secured ₹409 crores in equity capital through a preferential allotment. This significant fundraising effort, approved by the board, is a key step towards bolstering the bank’s financial strength and supporting its ambitious growth strategy. The funds were raised from a consortium of reputable investors, including the International Finance Corporation, Bajaj Life Insurance, HDFC Life Insurance, and Aditya Birla Sun Life Insurance, pending final shareholder approval.
Strengthening Capital Adequacy
The capital raise is projected to significantly enhance the bank’s capital adequacy ratio (CRAR). On a pro forma basis, holding Risk-Weighted Assets (RWA) constant at September 2026 levels, the CRAR is expected to increase by approximately 1.2%, moving from 20.69%. This substantial improvement in CRAR provides a stronger foundation for the bank’s lending operations and future expansion.
Accretion and Future Fundraising
The preferential issue was undertaken at a premium to the bank’s current Book Value Per Share (BVPS). This pricing strategy is expected to result in an accretion of ₹0.8 per share as of September 2026. Ujjivan Small Finance Bank has an existing board approval for a larger fundraising target of up to ₹2,000 crores, with the resolution remaining valid until July 2027. The bank plans to raise the remaining balance within this period, aligning with its strategic objectives.
Financial Performance and Outlook
The bank reported robust asset growth, leading to strong revenue momentum. Net Interest Income (NII) saw a 35% year-on-year increase, reaching ₹1,244 crores. Net Interest Margin (NIM) stood at 8.4%, with an expectation of a slight moderation to around 8.35% in the second half of the fiscal year due to rising interest expenses. Operating expenses saw a 6% quarter-on-quarter increase, driven by investments in brand campaigns and branch expansion. The bank achieved an all-time high quarterly profit after tax of ₹365 crores, with a Return on Assets (ROA) of 2.4% and a Return on Equity (ROE) of 19.7%.
Strategic Focus
Ujjivan Small Finance Bank continues to focus on diversified advances growth, with a strategic shift towards secured assets. The bank aims to provide wider access to financial solutions for Indians. The management expressed confidence in the bank’s ability to deliver a significant beat on its ROA guidance for the full year, supported by favorable moving pieces and efficient expense management.
Source: BSE
