Ujjivan Small Finance Bank Limited ($UJJIVANSFB)

Ladies and gentlemen, good day, and welcome to Ujjivan Small Finance Bank Limited Q4 FY '26 Earnings Conference Call hosted by AMBIT Capital Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Jignesh Shial from AMBIT Capital. Thank you, and over to you, Mr. Shial.

Yes. Thank you, Michelle, and good evening, everyone. On behalf of AMBIT Capital, I would like to welcome you all to Q4 [indiscernible]

I'm sorry to interrupt you, sir. Sir, can you please start? Because your voice broke?

Am I audible now?

Yes, please proceed sir.

Yes. Okay. So thank you, Michelle, and good evening, everyone. On behalf of AMBIT Capital, I would like to welcome you all to Q4 and full year FY '26 earnings call of Ujjivan Small Finance Bank. We have, along with us, Mr. Sanjeev Nautiyal, Managing Director and CEO; Ms. Carol Furtado, Executive Director; and the senior management team of Ujjivan Small Finance Bank. I will now hand over the call to Mr. Sanjeev Nautiyal, Managing Director and CEO, for his opening remarks. Over to you, sir.

Thank you, Jignesh. Good evening, and thank you all for joining us today for Ujjivan's SFB's Quarter 4 and Financial Year 2026 Earnings Call. Please do note I will be referring to year-on-year comparisons with Q4 financial year '25 and quarter-on-quarter with Q3 financial year '26. The Indian economy continues to exhibit resilience as reflected in stable GDP growth outlook. This is supported by strong district fundamentals, government initiatives and interventions supported by adequate liquidity. On the industry front, overall Bank credit recorded strong growth of 16%, reaching INR 219 lakh crores, while deposits increased by 13.4% to INR 268 lakh crore as of March 31, 2026. The Reserve Bank of India has kept policy rates unchanged at 5.25%, while maintaining a neutral stance reflecting a balanced approach to support growth while retaining flexibility amid evolving risks. CPI professional inflation from March '26 came in at 3.40%, up points over February '26, and RBI expects headline inflation to average around 4.6 percentages for financial year '27. We do not expect rates to be increased unless there is a sharp surge in inflation above the RBI target range. Real GDP growth for financial year '26-'27 is expected around 6.9% as per RBI. The projection faces downside risks from geopolitical tensions, such as the West Asia conflict, oil price volatility, supply chain disruptions and super El Nino weather dominant fueling inflation. GDP expansion is likely to be supported by continued government capital expenditure and a recovery in private consumption. I will commence with our financial year 2026 journey before I delve into quarterly performance. We received communication from the RBI on 13th April on our application for voluntary transition to a universal bank. The regulator while returning our application has acknowledged our ongoing efforts towards diversification of our loan portfolio. We shall continue to engage with the RBI and reapply as per their constructive guidance at an appropriate time, demonstrating a diversified portfolio. We remain committed to our universal banking aspirations. During the year, we continued to widen and deepen our Board and management. At the Board, Mr. Aniruddha Paul brings expertise in complex transformation, innovation in AI and data, process and technology. In financial year '26, still remember '25, management additions of Mr. Umesh Arora, Mr. Deepak Agarwal and Mr. Vijayalakshmi Muddu has strengthened business, strategy and audit functions, respectively. In quarter 4 financial year '26 with the appointment of Mr. Pankaj Gupta as Chief Digital Officer; and Mr. Mohd Shakil Khan as Head of Collections, our digital capabilities and collection portfolio are further strengthened. Let me now enumerate a few important milestones achieved in financial year '26. Deposits and gross loan book each have crossed INR 40,000 crores taking balance sheet across INR 50,000 crore mark. Retail deposits crossed INR 30,000 crores and savings accounts crossed INR 10,000 crores. Housing vertical comprising of affordable housing and micro mortgage crossed INR 10,000 crores, while MSME and FIG crossed INR 3,000 crores each. Total secured advances portfolio crossed INR 20,000 crores. Micro banking assets, GL and IL combined grew past INR 20,000 crores after large contraction in financial year '25 and also in financial year '24. Q4 concludes another important year for Ujjivan, marked by strong execution, improving operating performance and continued strategic progress, with the outcomes in line with the guidance at the start of financial year '26. We continue to see strong momentum in deposits growth. Total deposits stood at INR 45,668 crores, reflecting Y-o-Y growth of 21.4% and 8.2% Q-o-Q, while CASA deposits grew higher, leading to improvement in CASA ratio to 28.6%. Retail TD plus CASA stood at INR 31,995 crores, contributing 70% of total deposits. Cost of funds for the quarter stood at 7% and for the year stood at 7.2%. In a period marked with tight liquidity, we maintained CD ratio at 89% with comfortable liquidity reflected in LCR at 142% as of March 31, 2026. Focus remains on strengthening granular and retail-driven deposit franchise and further improved on the CASA ratio. On the gross loan book during the year, we continue to progress towards building a more balanced and diversified loan portfolio with a clear focus on increasing the share of secured assets. The secured portfolio now contributes 49.4% of the overall book, up from 43.5% Y-o-Y and 48.1% Q-o-Q. This transition positions us well for more stable and sustainable growth going forward. Disbursements during Q4 FY '26 were highest ever at INR 9,811 crores, up 32.1% Y-o-Y and 18.3% Q-o-Q, reflecting strong demand across segments. The gross loan book reached INR 40,655 crores, growing 26.6% Y-o-Y and 9.7% Q-o-Q. The secured portfolio scaled meaningfully to INR 20,079 crores up 43.5% Y-o-Y and 12.6% just Q-o-Q. Within secured segments, housing portfolio continued to demonstrate strong traction with growth of 43.4% Y-o-Y and 9.6% Q-o-Q, while the MSME portfolio witnessed robust growth of 57.9% Y-o-Y and 12.8% Q-o-Q driven by strong execution on the formal and semiformal focused MSME strategy. We also saw strong momentum across newer business lines with gold loans, vehicle finance and agri banking, scaling up rapidly by 292%, 11% and 126% Y-o-Y, respectively. I am pleased to note these 3 newer lines now contribute around 6% of our own mix against 3% in financial year 2025. In micro banking, as guided earlier, we witnessed healthy disbursement growth of 11.9% Q-o-Q to an all-time high of INR 5,245 crores. During the quarter, MB portfolio grew to INR 20,709 crore, up 6.9%. Implementation of guardrails has stabilized portfolio and durable demand returned. The individual loan portfolio continued to grow steadily, while group loan growth remained calibrated. The new customer addition for financial year '26 was at 5.4 lakhs. Coming to bank level asset quality. We have seen stable performance with improving trends across portfolios during the quarter. At a bank level, GNPA stood at 2.27% with sequential moderation in PAR, reflecting improved improving borrower behavior and the effectiveness of our collection efforts. Overall, portfolio quality remained robust with credit cost improving to 2.2% of average gross loan book for financial year '26, down by 20 basis points Y-o-Y and a visible moderation in slippages during the period. PCR improved to 81%, providing adequate buffer. Bucket-X collection efficiency in micro banking remained strong at 99.8% in March '26 and above 99.7% across Q4, underscoring disciplined execution on the ground. Within the secured portfolio, asset quality continues to remain robust with housing and MSME portfolios showing healthy performance and improving delinquency trends. Our financial outcome for Q4 reflects near normal portfolio and operational performance. Total income for FY '26 stood at INR 8,039 crores, up 11.6% Y-o-Y, while quarterly total income came in at INR 2,186 crores, up 18.6% Y-o-Y, reflecting continued momentum. We delivered strong NII growth of 26.4% Y-o-Y and 9.2% Q-o-Q to INR 1,092 crores, driven by a robust loan growth and a stable product yield. Net interest margin for the quarter improved further to 8.5%. This was largely due to reducing cost of funds, stable yields and optimal liquidity utilization. Other income remained healthy, driven by processing fee and insurance income. Other income to ATA for FY '26 is at 2.2%. Interest expenses were well managed through active liability management, while OpEx to ATA for financial year '26 came in at 6.4% and cost to income for financial year '26 at 65.6%. Net profit for financial year '26 came in at INR 693 crores with ROA and ROE at 1.4% and 10.9%, respectively. The exit quarter PAT stood at INR 282 crores. ROA and ROE were at 2.1% and 17.2%, respectively. Future FY '27 and beyond, for. FY '27, we plan to accelerate both branch and digital infrastructure, in line with asset growth objective of around 25%. Current financial year will focus on branch addition of about 20%, keeping with our growth plans for the current financial year. Our digital and AI and analytics investments will continue to better align with our existing and new customer needs, strengthening our data foundation through cloud-led platform, integrated architecture will ensure we deliver on a truly connected bank, thus, augmenting our customer acquisition and retention through their life cycle. Guidance FY '27, grow the advances by around 25%, expect credit cost to moderate to 1.4% to 1.5% of the average GLB, reach ROA of around 1.6%. As I conclude, we remain committed to profitable growth with focus on investments in distribution, technology, risk and multiproduct infrastructure. Additionally, to maintain adequate buffer over the regulatory capital threshold, our Board has approved a range of equity capital for an aggregate amount not exceeding INR 2,000 crores. This capital infusion would propel growth for the medium term. I now hand the call to the moderator to commence the Q&A. Thank you. Thank you very much.

[Operator Instructions] The first question is from the line of Digant Haria from GreenEdge Wealth.

Congrats on a good set of numbers. My first question is that we have an average ROE of more than 2%. And for the next year, we are guiding an ROA of around 1.6%. So is it because you said that we'll open more branches. That is fine. But will it be like our OpEx growth at 40%, 50% because the only line item, which will probably increase and pressurize our ROA? That's my first question.

So I think, Digant, as I said, we would be entailing investments on the lines that I indicated, which is on tech, digital, AI, branch expansion. So all these expenses or investments would actually lead to an ROA, which I indicated, and therefore, I would not see anything unusual about our numbers.

Okay. Okay. Okay. Because the exit -- the credit cost this quarter rate is around 1.1, we are guiding for around 1.4. So like what is -- so you don't see anything adverse there right just higher investment, which is pushing the ROA down next year in our guidance.

Digant, this is Siddharth here. The credit cost you're referring to is on DuPont. What we are reporting is on an average GLB. So that's the only difference. But Mr. Nautiyal will give the further response to your question.

So Digant, we have got the guidance of Reserve Bank of India. So obviously, gradually, we will be scaling up the secured book also. And therefore, the consideration will alter and change and that would also have a bearing on the return on the assets.

Okay. Perfect. Perfect. So I understand that this 200, we are at 51% in micro banking. We will not -- like we'll not derivatively slow it down, right? We may increase the other part faster? Or how are we thinking about this particular...

Absolutely. Absolutely. We continue to do the micro finance business as we do and also see that the ratio of the secured book grows faster. So that is how we are going to calibrate the 2 sides of the loan books.

[Operator Instructions] We'll take the next question from Shreepal Doshi from Equirus.

Congrats on a great set of numbers. My first question was on the growth front, while we've highlighted 25% growth on the overall book, what would be the segmental growth aspiration in segments like micro banking as well as home loan and the other segments that we have launched recently? That is my question number one. And the other question is on the margin front. So I think the deal participant highlighted OpEx being one of the aspects, but would it also be margins given that we are focused -- we will be focusing more on secured side? And therefore, from our exit margin of 4Q, we would see whole year FY '27 margin coming down? So these are my 2 questions, sir.

So as far as the the micro banking business is concerned, we would be growing it at less than 10%, I would say, a higher single-digit number and correspondingly, the secured book would grow at a much faster pace. And this combination is going to lead to the return on assets that we have given as a guidance at 1.6%.

And sir, on the margin front, NIM...

NIM, I think the second question of yours was on the NIM side.

Right, sir. Right.

All right. So what we are saying is the NIM for this year would be at the same level of the exiting quarter, right, close to that number.

Okay. Okay. So we will be at close to 8.4%, 8.5% is what we're guiding for?

Yes. Yes, please. .

Got it, sir. Got it.

The next question is from the line of Sarvesh Gupta from Maximal Capital.

Congratulations on a good set of number. Sir, just to understand this guidance a little bit better. You are saying that the NIMs would remain at the same level as exit quarter, which is Q4. So what kind of OpEx growth are we envisaging in this year?

Our cost to income. Our cost-to-income ratio, despite the investments that we are going to do will continue to remain at the same percentages as we had in the preceding financial year, which is '24 -- '25-'26. So you would expect to see the same cost-to-income ratio presiding as of 31st March 2027.

Okay. So sir, in the absence of not much of an increase in cost to income also. So I just wanted to understand like this 50 basis point compression in ROA, that would be caused by which particular line item in our P&L?

So the investments and new projects would be on branches, on efficiency enhancements and the others, which are about marketing and new training programs, efficiency would be on IT projects, AI investments, low-cost channels and branches about infrastructure and staff costs.

Okay. Okay. Sir, I'll maybe take it offline to understand a little bit better. Just secondly, on the -- like on the secured side. So you have -- we have seen a higher yield for the overall book of the only secured side. So given the plans for next year, how are we seeing this book behaving in terms of the secured book yield? And what would be the main drivers here?

This would remain more or less same as we have seen in the financial year '25-'26.

Okay. So this year, we have seen a steady sort of increase in the secured book yield. So do we expect now to stabilize at this level? Or how do you see it?

Yes. Yes. We seem to be having the capacity to stabilize them at the same level as you've seen in the last quarter. In fact, in the third and the fourth quarter, the enhancement in the yield, which we have seen generally would continue in the financial year '26, '27 as well.

Okay. Okay. And finally, sir, on this fundraising, when do you plan to do it? Is it -- will it happen this quarter itself? Or what is the...

Our plan is to do it in the second half of the current financial year, depending on the -- depending on the suitability of the circumstances.

Okay. Okay. Sir, final one question, if I may. Sir, given this RBI guidance, is there any specific number in terms of the secured book mix that we would want to reach to? Because generally, I think a lot of -- given the degrowth in the microfinance industry that we have seen I think normal microfinance growth could be higher than a single-digit number. So are we sort of -- do we have a plan, let's say, by when we want to reapply? And hence, we want to sort of not grow that book at a normative number and grow only at a single-digit number? Or do we have a mix in plan for the next year that we want to read this mix in secure. So if you can throw some more color on how are you thinking given that you guys want to reapply?

So RBI does not share or direct or guide a particular ratio, we will have to devise our own needs of arriving at a particular ratio by an appropriate time before we contemplate applying to the Reserve Bank of India for transition to universal banking license. So we will continue to strengthen and enhance the secured book in a manner that the journey is palatable maintaining the profitability underpinnings and to also ensure that the ratio is better than what we had shown to the Reserve Bank of India. So this will be a self-discovery, I would say. But certainly, we will calibrate and decide at what ratio by what time we need to abide by so that we are in a position to apply to Reserve Bank of India. For this year, I can only guide that our secured portfolio would be a little upwards of 56%.

[Operator Instructions] We'll take the next question from the line of Abhishek M from HSBC. .

So 2 questions. One is your guidance on margins. So when you say margins will be stable from here, and the secured book would reach 56% from 49% -- from 49% yes. If I look at the yields, most of the secured book yields are lower. I mean I understand you have some pricing power with your customer side, but still most of the secured book yields are lower than your MFI and individual loan needs. So how do you plan to protect your margin with such a sharp change in loan mix? And at the same time, do you see any further cuts in your TD? Do you think you have room or you're actually going to have to increase it a bit because of the competitive scenario. So just wanted to understand your margin guidance in the context of these 2 things. The second question is on OpEx. So if I split your OpEx into business costs where you are pushing up your secured book and trying to change your mix versus any kind of technology upgrade or system upgrade or anything else that the RBI may have asked you to do as part of your conversion into a bank, how would you split it? Like the kind of OpEx growth you're seeing this year? What would it be driven by? Yes, those are the 2 questions.

So I think on the margin side, we will continue to see some release of the -- on the cost of deposit side. So we will benefit on the cost of fund side that also needs to be factored in. And also because of the health of the microfinance portfolio now in a spring shape, the reversals of the interest on account of the NPAs would also be lessened, much lessened. So that is an area where we would also -- and the release of the cost of funds or the cost of deposits is also what we are going to witness. So these would be the...

In terms of your cost of deposits coming off, how much more repricing would be left?

Benefit of around 30 basis points.

It's still left? .

Yes. Yes.

Okay. And in terms of the interest reversal. Now I guess that would already be there in the 4Q numbers, right? Because now your PAR has gone down quite substantially. So do you see further sharp improvements over there? Or how...

Not sharp improvement, not share improvements. But at least the new book or the new exposure will behave very properly and therefore, we'll not have any stress on that account.

Yes, sir, but that would be in your 4Q numbers. You are already replacing a 22.5 maybe to about [ 10, 20 ] on the mix change impact still remains the main issue.

Right. Right.

So how will your NIM be stable? That's again, maybe 20, 30 bps improvement from the cost of funds side, that will be is to offset the mix change, is it?

We also have the 2-wheeler and the proposed used car product that we are going to launch. The 2-wheeler has a substantive yield sitting on it. Then we also have the gold loan, which is upward of 14% and micro mortgages, which are at 19.8%. So these 3 business verticals would continue to support us on the yield side and the other secured businesses, which are the housing and the MSME would continue to maintain the yields that they have shown and basically help us to maintain the NIM overall with the support of reduced cost of funds that I spoke about.

Got it. Got it, sir. And the OpEx question?

On the OpEx, I would request you if you can get in touch offline to have more details about it.

Okay, sure, sure. Got it.

The next question is from the line of Kaushik Agarwal from Haitong Securities.

Yes, congratulations on a good set of numbers. Sir, my first question is on the deposit front. So see, broadly, your deposit growth has been slightly lagging the overall advances growth. However, the CASA ratio has been improving consistently. So broadly, how do you see your CASA ratio for the next year? Number one. And is there any possibility or you have taken any price hike on the TD side because a lot of competitors have indicated that they have taken some price hike on the term deposit side. That is question number one. Number 2 is on the gold portfolio. So gold, I was just checking the average ticket, so on a Y-o-Y basis for your book has gone up by 60%. And -- but the yields are also inching up marginally. So I have seen there is a 30 basis point increase in the gold loan portfolio yield on a Q-on-Q basis. So can you just help us understand what is your strategy with respect to gold loan book? And then last is broadly on the asset quality piece. Is there anything which you can indicate on a qualitative basis for your customer segment, in terms of any issues they are facing from this West Asia conflict or any sort of early warning indicators that you are noticing in your portfolio? So yes, these were the 3 questions from my side.

So if you look at our CASA ratio has improved by Y-o-Y 1.75% and Q-o-Q 1.28%. We are at 28.6%. We expect it to increase further, it is quite difficult to give you exact number, but it will be around 30% will be the CASA ratio. Our focus will continue to be CASA, but yes, overall book will continue to grow.

Kaushik, this is Vibhas. On gold loan, you're right, our ticket size has increased during the financial year. At the same time, our yields have also increased. Ticket size naturally has increased because when we started gold loan initially we were experimenting and working with mostly microfinance customers. But they, as gradually, we have increased focus on open market and leads from other verticals as well, leading to higher ticket size. At the same time, during the year, we have also adjusted interest rates for lower ticket size loans positively that impacted yield positively.

On your question about -- it was about CD ratio. So we have -- we have basically tried to pivot ourselves around 88% to 89% CD ratio, which helps us to manage with a lower deposit growth that came in the last year. And the CASA ratio is what we are going to achieve somewhere around 29% -- 29% to 30%. The CASA ratio would be around 29% to 30%.

Okay. So sir, just continuing on this sorry. Just checking that, are you building in any price hike or have you taken anything on the deposit front?

As of now, we are not contemplating any deposit rate, we'll continue. We'll watch this space closely. And if anything happens, we'll calibrate accordingly.

As far as the risks to the various businesses on account of the Middle East crisis, what we would like to say is that our portfolio is overwhelmingly domestic granular and retail nature. And we do not have any foreign currency lending exposure new exposure to oil, gas, defense aviation. And therefore, our customer segment is more or less insulated from first order geopolitical disruption. But we are mindful of the situation and therefore, we have taken steps to ensure that we refresh our scenario framework across all major verticals. We have stress tested our portfolio. Origination poster is calibrated geography by geography, and we have a heightened monitoring system in place, for example, for 2-wheelers, used vehicle, MSME working capital and monitoring has been tighten and with strong provisioning and capital buffer, this provides us a very meaningful absorption capacity for any second order impacts.

The next question is from the line of Jitark Shah from Union Mutual Fund. .

Yes. Okay. So sir, I just have 2, 3 questions. So first, on the ROA front, I understand what you're trying to say is that since secured book will grow at a much faster pace, there could be some pressure on the yield. But at the same time, it will be likely compensated by the cost of funds, and that's why the margins are going to remain steady state. Is that the correct understanding?

Yes, please.

So then on what -- which are the levers where from current state of 2% ROA, you are guiding for about 1.6% ROA for FY '27. So what could really arrive ROA compression from the current exit ROA? That's my first question. And the second question is since earlier, you had guided for a 70-30 mix between secured and unsecured piece over the next 5 years with almost 5% of change. So now will there be any change in that time lines considering the RBI's decision? And will there be any change in strategy in that? And lastly, from the INR 2,000 crore CapEx front, would you have -- I mean, could any sort of inorganic acquisition of secured book beyond the part. So these are my 3 questions, sir.

Sir, if you are speaking, I suppose you are on mute.

Yes, yes, I can hear you. .

We have no plans at this point in time for any inorganic acquisition. And we are maintaining the 1.6% at this point in time. These are the numbers that we have worked out if there is any upside that could be possible.

Okay. Okay. So basically, if I understand correctly, so margins are going to remain steady state. And so you are just guiding it on your estimates, the 1.6%, but the current OpEx and credit costs also, you don't see any material deterioration that could lead to any compression at an ROA level, right? .

No.

That's the right understanding?

Yes, please. Yes.

Okay. Okay. And sorry, sir, I just missed this part on your time lines about the 70-30 mix between secured and unsecured, if you could to help that.

So we have broadly constructed our secured and unsecured ratio for this year for the remaining years, which is '27, '28, '29, we are still in the process of deciding the configuration, and we would perhaps come back to after a short period.

Sure. Got it. And sir, just trying to understand this one thing. So you already have a significant car on your book. So you are fairly well capitalized. Then what would be the rationale behind having fresh cap rate since you are already well capitalized and you can grow organically also this well. So just trying to understand the logic behind that.

So we have already guided for a 25% growth on the asset side per year. And our Board mandated threshold is 20%. We also need growth capital to fund our appetite for the next 3 years. And therefore, we think this would be the right time to fund ourselves and to be replete with the capital that we would need for our fueling our growth for the future.

The next question is from the line of Ashlesh Sonje from Kotak Securities.

Two or 3 questions from my side. Firstly, on the CASA deposit book, good to see the progress there in spite of cutting rates. The question is, do you see any further scope to cut the pricing on TDs as well as for deposits and getting them closer to where the mid-tier banks are? That is one. Secondly, on the MFI book, is there room to increase the pricing there because we are still, let's say, at the lower end of the pricing of the market in general? And last one is a data keeping one. If you can share the MFI slippage for the quarter?

Ashlesh, this is Hitendra. So on the saving account side, we have changed some rates, interest rate on a higher bites, okay? So we are expecting close to 25 to 30 bps reduction on fund. We have no plan as of now to reprice our retail TD or TD. We will wait and watch this space, and we'll be competitive in the market. If anything happens in the market, recalibrate. But as of now, we have no plan to change our interest rate on deposits.

Ashlesh, this is Vibhas. On similar lines, as Hitendra mentioned, in MFI book also, we are not thinking of changing interest rates at this point of time. We want to hold on to what we are charging at this point of time.

Understood, sir. And if you can share the slippages number for MFI for the quarter?

Slippages for MFI. Slippages for MFI regard around group loan individual and put together would be in the range of INR 130 crores.

The next question is from the line of Rajiv Mehta from YES Securities.

Very good number. I just have one question on this overall mix changing in the current year. So we demonstrated pretty strong recovery in microfinance business in few quarters. Now we're talking about growing the book by 8% to 9% in the next year, FY '27. So how would you retain growth? I mean we have a seasoned leadership team who has navigated the cycle very well. And you also have a large on-ground team in MFI. So then would you just limit customer activation to pull down growth to pull down the current momentum. And if you do that, wouldn't it be difficult to retain good people in the microfinance business?

Rajiv, so we were slow. Actually, we were degrowing our microfinance book post Guardrail 1.0. Even after Guardrail 2.0, we -- our customer base was degrowing. So the growth of this year would have 2 components: one, the new customer acquisition and the second is the repeat loans. Now most of the repeat loans that most of the customer acquisition that we have done would not be eligible for repeat loans, which is why you will see a slightly lesser growth this year as compared to the last -- as compared to what it could have been if we had done customer acquisition in the last cycle. So that is the reason why you will see a slightly lower growth. It may not cross maybe 10%, 10%, 11%, single digit -- high single digit means around 9%, 10%. So it is on account of the repeat loans that this is happening.

No. But Ashish, you will also have a lot of place for space for acquiring new customers as the guardrails impact has got kind of -- is going behind us and the eligibility of the customer pool who were restricted by the guardrails to the industry. Once they come out of that eligibility become eligible for loans. Then I mean the obvious lever to kind of not grow faster is to limit the new customer acquisition.

So Rajiv, the way we've been looking at growing our businesses, approximately 25-odd percent new to bank customers and 75% repeat. We don't see a very big swing there in favor of the new 2 bank in the coming financial year. A higher growth would mean that we may have to actually cross 40%, 45% new to bank, that's something that we will be a little cautious about doing. Maybe 25% could go up to 30%, but certainly not more than that.

The next question is from the line of Sailesh Kanani from Amsec. .

Is my voice audible?

Yes.

Sir, just my first question, the more clarification on the ROA guidance. Are we building in any contingency buffer to be built up next year that is FY '27, so that when ECL implements happen, we can kind of apply or reapply for the U.S. banking license?

By contingency buffer, you would say additional provisions, Shailesh?

Yes. Yes. Yes.

No, we don't have a plan to that effect, Shailesh for the next financial year.

Okay. Okay. And okay, the second question was with respect to SA bucket. So I remember Jan, you had indicated that we had taken cuts in the SA bucket and alluded to that as well, right? But when I see the cost of the funds, the cost of remains to be quarter-on-quarter is at 5.2%. So just wanted to understand that part. I guess even in April, we have taken on more SA rate cut, right? So why this is getting reflected in the numbers?

So our -- am I audible, Hitendra here. So our cost of fund, if you look at SA exit March was 5.21%, okay? And what rate we have changed in April, we'll see impact coming now. So around 25 to 30 bps reduction will happen as we go along from here. .

So we have taken on in the month of Jan as well, right, if memory serves, right?

This rate cut, what we have taken, I'm talking in April.

Okay. In Jan, we had not taken the SA rate cut?

SA, we had taken that advantage game. If you look at January cost of fund was around -- it was 5.25%, which came down to 5.20%.

Okay. Minimal impact over the...

That's right.

So this time, we have taken rate cut on our meti book where the maximum book lies to 33% of my book lies in INR 10 lakh to INR 10 crores. There, we have reduced our rate. So we'll see higher impact this time.

The next question is from the line of Mehul Panjwani from 40 Cents.

Most of my questions have been answered, but I was just one correction -- I mean one confirmation because I may have missed something. Sir, can I secured lending continue to grow at 35% to 45% while maintaining a low GNPA?

So the growth of our secured book is coming from both our established products, which is affordable housing and MSME and new businesses, which we have started in the last 3 years, micro mortgages, gold loans, 2-wheeler agricultural loans. We've also initiated -- we've also built a book on working capital. That's about INR 600 crores, INR 700 crores already. So when we are building our book, the newer customer acquisition is a very diversified income profile. Working capital book for us is about INR 1 crore. Average ticket size LAP is about INR 60 lakhs, INR 65 lakhs. And then there are the other businesses, 2-wheeler, micro mortgages, which are at the lower end. So on the secured side, as far as GNPA is concerned, while the book is now seasoning, but at the same time, we've put an adequate guardrails around maintaining our collection efficiencies. So micro mortgages 2-wheeler, all of them are above 99.5% on Bucket-X. Affordable housing, MSME, they are all at 99.77%, 99.75%. So in terms of GNPA, I think we are broadly maintaining the asset quality as far as the secured benchmarks are concerned.

So can we expect to grow margin by 45%?

Yes, 40% is something that we have already planned. So 10% on unsecured, 40% on secured and therefore, 25% average.

Right. And sir, my next question is on the time line for going back to RBI on the banking license. Do we have any -- I mean I may missed the commentary, but if you can anything.

As new -- in the initial part, I had enumerated that Reserve Bank of India has only given us the guidance to improve further the secured, unsecured ratio. And that is not a number that RBI guides or directs. So we will have to see how much this ratio can be delivered. And what is the appropriate time, we will have to sit down and decide and build a plan. And based on an appropriate ratio being achieved by us with a further guidance in the next few years, we'll be in a position to take the call. Obviously, that's not going to happen immediately.

Sir, what does this do to our 3-year road map because we may have some road map based on the license being wanted and now that -- I'm not saying it's a setback, but I'm just trying to understand how -- what is the change in strategy for the next 3 years?

For '27, we have given the guidance. And as I said, we are in the process of building the plan for the next 2, 3 years. And we would then, after finalization of our plan, we would certainly sharing that with you all in some -- at some point in time in the very near future. .

Right. So can we expect...

I'm sorry to interrupt you, sir. Sir, I would request you to kindly rejoin the queue for follow-ups, please. There are others waiting for their turn. We'll take the next question from the line of Sagar Shah from Spark PWM.

Yes. First of all, congratulations to the entire team of Ujjivan for posting excellent set of earnings actually. Now my first question was related to OpEx. You highlighted in your opening commentary that we are guiding for around 20% increase in the branches actually. As on March '26, we are at around 776 branches. So it is safe to assume that we are likely to open at around 140 branches in the -- in next year or maybe in the next 2 years. Can you please clarify that?

Broadly, yes.

So I mean in FY '27, we are going to open 140 branches?

Yes, please.

Okay. That's fine. And my second question, sir, was related to our deposit growth. Deposit growth has lagged in this quarter by around 200 bps actually as compared to our advances growth. Now going ahead, are you guiding even for very -- your guidance for CASA is at around 30%. So we are not assuming very strong growth in CASA, even though in this quarter has been actually very good on the number front. Now my question was related to that, that how are we basically on the TD growth. Are you assuming at least a 25% plus growth in this quarter? And what exactly measures have you taken? Are you banking on some new geographies for such kind of healthy growth? Or what is your strategy going on this on the liability front?

Sagar, so for this 30%, what we said was the CASA ratio, not the CASA growth rate. .

Yes, sir. CASA ratio. Yes.

Okay. So see, our deposit book will grow in the line of our credit growth, okay? We will not lack your. And if you look at our growth in deposit has been steady since July, August, okay? We had deliberately slowed down on deposit for 3 months because we had some excess liquidity. Thereafter, we are seeing a very healthy growth of deposits, and our focus will be continue to book a retail TD book than above side. I hope that answers your query.

Yes, yes, yes, certainly. Now my last question, sir, was related to asset quality. Asset quality in terms of GL, now the entire microfinance segment is doing well, and it's actually rebounding. And I hope Ujjivan does well is especially in higher loan. So is it safe to assume that the last 2 years, the kind of growth that we got in the secured fund, and that is why our ratio between secured to unsecured were relatively very quickly towards secured growth. So now over the next 2 years till FY '28, is it safe to assume that it will be our book will look like 55-45, 55 towards secured and 45 towards unsecured, what can be the ratio that you can drive for, sir?

So as Mr. Nautiyal had initially in his initial comments said -- we will end March '27, somewhere in the range of 56.4. So yes, while you said 55-45, that is roughly the number that was suggested earlier.

Ladies and gentlemen, this will be the last question for today, which is from the line of Darshil Jhaveri from Crown Capital. .

[indiscernible]

Sorry to interrupt you, sir sir, there is a lot of background noise at your end.

Is this better?

Yes.

Firstly, congratulations on a great set of results, sir. Sir, sorry to harp upon the question that a lot of people have asked. But we are saying our NIM growth, NIMs will be around the same level. Our OpEx will be around the same level, our credit cost is similar to Q4, then why will our ROA decrease from 2% to 1.6%, just trying to find that a bit like hard to reconcile, right, right? So like if everything is the same than ROA should be similar to Q4, right? Like is there anything wrong with that assumption, sir? Hello?

Darshil, this is Siddharth here. As Mr. Nautiyal has -- you rightly said, this is the fourth of the time you've got this question on the call. What you are not catching right now is the fact that we are being conservative on both our OpEx and our credit cost. And our guidance is coming from that place. We do appreciate there are certain dynamics, which may play out on a couple of our key products and covering for eventualities is where you're seeing the ROA at the guided level. We will certainly update you as we see any meaningful change in this particular number. We appreciate the sensitivity of the same, and that's where we would like to leave it for now.

Fair enough, sir. And just wanted to understand, like a few of your peers were saying that they are seeing some kind of intense competition in terms of deposits. So do we feel that there might like the 30 basis points improvement that we are hoping for, they can come under some kind of pressure because like the deposit. Just a bit hard to get right now. What are your comments on that, sir?

Hitendra here. As of now, we don't see any stress on deposit side. Is that growing as per our expectation. And going forward, we will maintain the same level of growth.

As that was the last question for today. I would now like to hand the conference over to Mr. Sanjeev Nautiyal, MD and CEO, for closing comments. Thank you, and over to you, sir.

Once again, thank all the participants for their time and interest. We at Ujjivan SFB remain focused on delivering on profitable growth while we build an enduring institution. Please reach out to our IR team for any queries that you may have. I would finally like to give the guidance of NIM around 8.5%. The OpEx to ATA ratio would be 20 to 30 basis points above financial year '26 due to the investments that we are making for the future growth. And thereafter, this de would decrease, hence, the base case ROA of 1.6%. Thank you. Thank you very much. .

Thank you, members of the management. On behalf of AMBIT Capital Private Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.