Thank you. Good evening, everyone.

I welcome you all to Q3 FY '26 earnings call of Ujjivan Small Finance Bank. Today we have the senior management team of Ujjivan Small Finance Bank represented by Mr.

Sanjeev Nautiyal, MD and CEO; Carol Furtado, Executive Director; Mr. Sadananda Balakrishnan Kamath, CFO; Mr.

Ashish Goel, Chief Credit Officer; Mr. Vibhas Chandra, Head - MicroBanking; Mr.

Hitendra Jha, Head - Retail Liabilities, TASC and TPP; Mr. Umesh Arora, Head - Emerging Business; Mr.

Martin P. S., Chief Operating Officer; Mr.

Brajesh Cherian, Chief Risk Officer; Mr. Siddharth Bhardwaj, Head - Investor Relations; and Mr.

Gaurav Shah, Lead - Investor Relations. I would like to thank the management for giving us this opportunity to host this call.

I would like to hand over the call to Mr. Sanjeev Nautiyal for his opening remarks.

Over to you, sir.

Thank you, Alorik. Good evening, everyone, and thank you for joining us today for Ujjivan's Q3 and nine-month financial year '26 earnings call.

On behalf of the entire Ujjivan team, I would like to extend our warm wishes for the New Year. Please note, references will be made to Q3 '26 versus Q3 '25 as YoY, and Q3 '26 versus Q2 '26 as QoQ.

The operating environment remains favorable, as reflected in real GDP growth print of 8.2% in Quarter 2 of financial year '26. This marks the fastest pace of expansion over last 18 months, with financial year '26 growth expectation at 7.3%.

This underscores the continued strength in domestic demand, alongside improving industrial and manufacturing capacity utilization, supported by healthier corporate revenues. For the banking sector, these strong macro fundamentals translate into supportive backdrop for sustained demand for credit, as well as improving asset quality.

The RBI MPC rate reduction of 25 basis points in December lends further impetus to future growth prospects. We look forward to the Union Budget to continue the path of fiscal consolidation while boosting key pillars of GDP growth.

Coming to our quarterly performance, we have delivered yet another stellar quarter on the overall business. Deposits grew by a strong 7.7% QoQ and 22.4% YoY to ₹42,223 crores, with our credit-to-deposit ratio staying comfortable at 88%.

CASA mobilization has been healthy and remains a key focus area for us. In line with our guidance, we continue to expand our geographic footprint during the quarter with the addition of 11 branches, taking our total branch network to 777.

This marks completion of planned addition of 24 branches for financial year '26. The clear focus on acquiring quality new-to-bank customers and dedicated channels to engage better with existing-to-bank customers has led to CASA percentage staying above 27% for two consecutive quarters.

We have witnessed improvements both on month-end balances and monthly average balances. With the planned enhanced engagements with CASA customers, we are poised to better this ratio.

Cost of funds continued to trend lower due to the deposit rate cuts already taken in H1 FY '26 and better overall liquidity planning. Cost of funds for the quarter was 7.08%, down 26 bps QoQ.

We are closely monitoring the tight liquidity scenario and remain comfortably placed with LCR at 165.6% as of December '25. Effective January 9th, savings account deposit rates in the lowest two brackets have been reduced by 25 basis points and 50 basis points, respectively.

Gross loan book, GLB, for the quarter grew by 7.1% QoQ and 21.6% YoY to 37,057 crore rupees, driven by the highest-ever quarterly disbursements at ₹8,293 crores. This was due to all-round performance across unsecured and secured products.

Our microbanking portfolio continued to demonstrate strong momentum across collections and disbursement growth. Bucket X collection efficiency showed continued improvement for seven consecutive months starting June 2025 and clocked 99.7% for December '25.

The book created with enhanced credit policies within MFIN guardrails is leading to these improved collections. The rejections trend has started to move lower, and we expect further improvement in new customer acquisition going ahead.

New customer additions were at 1.4 lakhs, up 11% QoQ. Disbursements in microbanking were at ₹4,688 crores, up 10% QoQ and 62.4 percentages YoY, led by improving market sentiments.

Group loans GLB grew 0.2 percentages YoY after a five-quarter contraction. GL continued to witness increase in ticket sizes in line with larger market trend.

Individual loans disbursement continued to grow steadily on back of graduating customers from GL. GLB came in at ₹5,687 crore, growing 4.1 percentages QoQ and 14.8 percentages YoY.

Coming to our secured portfolio, growth in the secured book continues to stay aligned with our long-term objective of increasing its share in the overall loan book, now reaching 48 percentages. Housing portfolio comprising of affordable housing and micro mortgages delivered strong growth of 49.6 percentages YoY.

Housing GLB grew by a healthy 40.3 percentages YoY to ₹8,231 crores. This was supplemented by micro mortgage book, which more than doubled to over ₹1,329 crore YoY.

Asset quality trends continue to be along expected lines, with PAR improving sequentially to 3.3 percentages and GNPA remaining flat at 1.1 percentages. Housing loan portfolio represents a mature business that we have built steadily over the last 9-plus years.

This book represents an important growth engine for the bank. Our focus has been on scaling this franchise in a calibrated and sustainable manner, leveraging our distribution strengths.

MSME GLB witnessed a robust growth of 69.1% YoY at ₹2,865 crore, driven by disbursement growth of 37.4% YoY to ₹457 crores. Asset quality continued to improve, with GNPA as of December '25 at 4.1 percentages, with new book showing negligible delinquency.

As the working capital business grows, the liabilities cross-sell continues to expand. The relatively new gold loans business has scaled up roughly fivefold YoY to ₹557 crores.

Disbursement capacity continues to expand, with the product now being offered in 349 branches, leading to 100 crore rupees disbursement month-on-month. With book LTV below 60% as of December '25, portfolio is resilient to any abrupt shocks arising from underlying gold price movement.

Agri loans now constitute 3.4% of the overall secured portfolio. The GLB has scaled sharply by 212 percentages YoY to ₹607 crores, supported by strong disbursement of ₹125 crore in Q3.

Vehicle loans, the steadily increasing new two-wheeler book is high-yielding at around 20%. Growth in the vehicle finance portfolio was driven on the back of the festivities in Q3, witnessing a robust growth of 120% YoY, reaching ₹823 crore, with GNPA at 1.8 percentages.

FIG book has grown 6.9% QoQ and 17.9 percentages YoY and continues to create opportunities for the bank across both assets and liability products. We will introduce our mid-corporate offerings in Q4 '26, which will expand the product suite.

AD-I business has commenced in November '26. At present, we offer FCNR, EEFC, and account payments for our customers.

We are in the process of starting our trade buildout to handle FX bills, LCs, and BGs. Coming to bank-level asset quality, PAR for the bank came below 4%.

This was 5.36 percentages as of December '24. SMA book continued the positive momentum and came in at 1.6 percentages.

As anticipated, slippages and write-offs have moderated to ₹221 crore and ₹126 crore, respectively, in Q3. GNPA came in at 2.4 percentages as of December '25.

Credit cost for the quarter, including ₹9 crore of accelerated provision, came in at ₹195 crore. PCR moved up to 76%, up 3% QoQ, reflecting positive signs in provision requirement in Q3, which is expected to see further reduction in Q4.

This is along guided lines. On the margin side, net interest margin for the quarter was sequentially higher at 8.2 percentages, supported by lower cost of funds, favorable product mix, lower interest receivable in unsecured portfolio, coupled with CRR relaxation.

Our reported net interest income of ₹1,000 crore is a growth of 12.8% YoY and 8.5% QoQ. This marks the highest-ever reported NII, reflecting our growth as well as normalization in P&L post the recent stress period.

As regards the implementation of new labor code effective November '25, we have assessed and accounted for the estimated incremental impact towards past service cost amounting to pre-tax ₹18 crores. Our cost-to-income ratio came in flat QoQ at 66 percentages.

Adjusted for this ₹18 crore one-off impact, our cost of income drops below 65 percentages. Profit after tax came in at ₹186 crore, with a ROA of 1.5% and ROE of 11.5%, indicating strong improvement in profitability.

The improved profitability is on expected lines and is built into FY '26 guidance range. On our universal bank application being considered by the regulator, we continue to remain hopeful.

To bolster the board, we welcome Mr. Aniruddha Paul to the Ujjivan family.

He has been appointed as an independent director effective today, subject to the approval of the shareholders. He is an award-winning business and technology leader with over three decades of global experience across banking, insurance, technology, and digital transformation.

He brings expertise in complex transformation, innovation in AI and data, process, and technology that will help the bank in its growth trajectory. As I conclude, I want to reiterate that the broad-based improvements delivered in Quarter 3 across key operating metrics are durable and reflective of disciplined execution, keeping in sight our long-term vision.

While we grow our various businesses, we are managing our expenses in a very tight band, and which should see our investments in distribution, process, technology, digital, and marketing creating an operating leverage over the medium term. As we close in on the end of the financial year, our teams are working on the annual operating plan for financial year '27.

We shall continue to generate growth momentum across deposit and asset products into the new financial year. Asset book diversification shall continue while improving asset quality.

Cost of funds is expected to trend better, leading to improved performance across parameters. I will pause here and open the floor for questions.

We have our ED, CFO, and other colleagues who will collectively answer the audience's questions. I now hand over to Alorik.

Thank you so much.

Hi. Good evening.

Congratulations on very strong performance. Sir, my first question is on the status of universal banking license.

While you remain hopeful about it, but has there been any communication or any kind of pushback as per in the recent time and which implies that the approval will come with some delay or which explains why it is taking so much time, because it will be about 12 months since we applied. If there is anything like that, or you think that it's a normal time and we are absolutely very near the point where the application will get a decisive decision from RBI?

Rajiv, it is being actively considered by the Reserve Bank of India, and we have to just wait for their decision. That's all I can say.

We would expect it to happen as quickly as possible. The decision, that is.

Okay. Sir, now, if you can comment on the NIM's trajectory, because NIM has pleasantly gone up by 30 basis points sequentially in this quarter.

Now, incrementally, when I look at your cost of term deposits, it was just the first quarter wherein we have started the fall happening by 40 basis points. Now, if you can explain the trajectory of how your cost of term deposits can further fall and up to what level?

You've also cut some SA rates, how would that also have some positive impact on the cost of fund? Now with the growth mix slightly getting better with MFI coming back, how do you see the yield playing out?

Consequently, as the dynamics of both asset and liability pricing, how do you look at your NIMs over the next two, three quarters?

Hi Rajiv. Rajiv, we expect the NIM to at least stay at the same level as we have reported in this quarter.

Possibilities for improvement do exist, and the kind of initiatives that we have taken on the reduction of the rates of interest, savings bank deposit rates in the lowest two buckets by 25 basis points and 50 basis points, and the tightening of the costs and the expenses, and the kind of portfolio health that we are witnessing on the microfinance side, and the growth that it is exhibiting, all points into a positive direction. Let the actual action happen in the last quarter.

We remain positive.

Okay. Sir, just two last things.

Where do you want to maintain your CRR? I'm sorry to interrupt, Rajiv.

Sure, no problem.

Hi, sir. Am I audible?

Yeah. Thanks for the opportunity, sir.

Two questions. One, on the yield on MFI, this quarter the yield on MFI has gone up on a QoQ basis.

Just wanted to check if this is a function of the lower slippages or you have taken any rate hike or done some sort of that thing there? That is question one.

Second question, sir, in terms of this individual PAR 0 number on the West Bengal side, I think that number has been quite sticky for last two, three quarters. When do you see improvement there?

The last question would be, sir, on the affordable housing book. I think in terms of PCR on the housing portfolio has come down quite a bit.

Over the last three, four quarters, it used to be 60% plus, 60%, 65%. However, I think that number right now is mid-40s.

What would be your comfortable level of PCR in the housing portfolio, as this is the one of the fastest-growing portfolio within the bank? Suraj, on the first question, which was 22.2% yield, the bank has not taken any changes in the lending rates.

It is only on account of reduced slippages and therefore, consequently, reduced interest reversals. The second question was related to individual loans with West Bengal, we had pointed out last time, was showing a higher PAR.

When you look at the SMA book, the SMA book has started to come down. Our Bucket X collection efficiency in West Bengal has also improved.

SMA has come down. However, 90-plus continues to be slightly on the higher side.

On housing, the PCR is 55%. I don't think it is lower than that.

Last time also, we had said that on almost all secured assets, our PCR is about 55%, and on unsecured, our PCR is in the range of 85%, bringing the overall PCR to 75%, 76%. That's continues even in the end of this quarter.

Sure, understood. Thanks for that.

Probably the housing, I'll take it offline.

Hi, sir. Thank you for giving me the opportunity, and congrats on a good quarter.

Sir, my question was on MFI segment. What is a customer base there as on December end?

How has been the customer addition in the last couple of quarters? Just wanted to understand that.

Then to follow up there, what is the kind of rejection rate that we are seeing in this segment for the new customers, given the kind of guardrails that are prevalent for MFI lenders? That is question number one.

Question number two was on the opex front. That run rate continues to be elevated.

While we've been adding branches there and also for, I think, the new product, the infra structure, but will the run rate come down, or will it remain elevated despite the C/I ratio looking better? Hi, Shreepal.

Answering to your first question. NTA is something which a question in industry in the last one year after the crisis.

How NTA moves will also decide that how overall borrower base increase in industry. This year has been good for us.

We started this year in the first quarter with close to 1.08 lakh new customer acquisition. Q2 was close to 1.24, and Q3 is at about 1.4.

There has been consistent improvement every quarter in terms of new customer acquisition, and we see that in next quarter also, we will see improvement in new customer acquisition. You also asked about rejection rates.

Rejection rate, obviously, after implementation of guardrail 2.0, it went up to 46%, 47%. If you look at our number now, our percentage of customers who are three lender or above has come down to 2.4%, close to 2.5%, which was close to 14%, 15% at peak.

As the percentage have moved down, our rejections have also come down to about 35%, 36%, and we expect this number to be there going forward. Got it.

Sir, what is a common reason of rejection? Is it just the lender cap or anything else?

It is a mix. It is also guardrail 2.0, which is lender cap, as well as overall indebtedness at the same time.

The other reason is customer repayment behavior with us and others. Got it.

Sir, on the second question, on the opex front?

Shreepal. Bala here.

Now coming to your question on opex. Can you hear me?

Yes, sir. I can hear you.

Coming to your question on opex, 6.7% was opex to asset ratio this quarter, which was higher by 40 bps, but it is lower than our internal plan. This was very much envisaged by us, and the increase is due to two factors.

One is you are aware the gratuity. We had to take a higher provision of around ₹18 crores due to the new labor code that had a impact of 10 bps.

The balance is mainly due to the business growth, which we factored in. Our dispersal was at an all-time high.

It is towards that. Q4 also will stay around same level.

That's what we are more or less anticipating. Yeah.

Q4 also, we should see 6.7% sort of a cost to average asset, is it?

Yeah. Next year, you should see an improvement, but this year it'll be at the same level.

This is what we had planned also in our budget for the year.

Got it, sir. Got it.

Thank you. Good luck for the next quarter, sir.

Thank you. The next question comes from the line of Ashlesh Sonje from Kotak Securities.

Please go ahead.

Hi, team. Good evening.

Two questions from my side. Firstly, if you can talk us talk us through the loan mix which you envisage over the next year or so.

How fast do you expect the share of MFI to decline, or do you expect it to stabilize around current levels? That is one.

Secondly, if you can just summarize the rate cuts which you have taken on SA again? I missed the numbers.

If you can also spell out what is the impact on the cost of SA you expect over the next quarter?

Coming to your first question, we are working on our budget for next year along with the medium-term plan. Once it is concluded, we'll share the details with you.

Till then, we remain committed to our Vision 2030. We are given all the details there.

You may refer to that. This quarter, we have reduced our SA into buckets: 0 to ₹1 lakh by 25 bps, and ₹1 to ₹5 lakhs by 50 bps.

Overall, 46% of deposit lies here, SA deposit in these two buckets. Right now, we are expecting cost of fund around 7% here.

Exit here.

Cost of funds 7% for next quarter? Overall.

Right now, SA is 5.2%, some moderation will happen here, around 5 bps types.

Also we wanted to add that the exit cost of fund by the year-end would be close to 7%. Yeah.

Sir. Thank you.

Am I audible, sir?

Okay. Thank you very much, sir, for this opportunity.

Just first up, wanted to understand, I think you mentioned in your opening remark as well, you expect a further moderation in the credit cost. You did mention in your presentation as well, our steady-state credit cost of 1% to 1.5%, right?

Just wanted to understand by when we do expect the steady-state credit cost we strive to achieve? Maybe what, we are two quarters away, four quarters away?

How should one look at it? Deepak, credit cost for us, when we had guided, we said that credit cost in H2 will be significantly better, and we will start seeing a lower trajectory.

As expected, Q3 has shown a very good improvement over Q2, and Q4 also will show an improvement over Q3. In terms of normalization of credit cost, we can expect that next year, the normalization should happen.

There will be some amount of stock available probably in the later buckets which should get provided in Q1, I would say. We could say that we are about two quarters away.

Ideally, we can say by second half of FY '27, one can expect a normalization of your credit cost, right? That would be a fair assumption.

We are in the process. The normalization has started, and normalization of credit cost happens with a lag of NPA recognition.

That process has already started in Q3, and I would say that by the end of Q1 and Q2, we should see the normalization of credit cost. By end of what?

By end of Q1 and definitely by end of Q2. By end of first half.

That's right. Okay.

Okay. My second question is on your ROA.

We have given our FY '30 vision, where we are seeing ROA of 1.8% to 2%, right? I think currently only at a not normalized credit cost, we are at an ROA of 1.5%.

You expect this ROA profile of the company because we are going more towards secured book to be limited to that below 2% kind of a range. Currently your credit cost is in the range of 2.1%.

On an average, steady-state credit cost of 1% to 1.5% will give you a delta of around 0.5% to 1%, right? Still we are talking about ROA of 1.8% to 2%.

Just wanted to pick your brain, how do you think on it, yeah?

We are going to have a diversified book, and as shared in our plan for 2030, we have worked out the entire plan, and definitely, it is coming to the range what you mentioned. Yes.

With the book which we envisage, with more of secured and unsecured tapering off to 30% by 2030, that can be achieved.

Okay. What is the assumption of secured book by FY 2030?

2030, we are assuming around 30% to 35% will be unsecured, and the balance will be secured. So 65%, 70% is secured, and there we expect a 1.8% to 2% kind of a ROA profile.

Yes. This year, we'll end around 50:50.

Slowly, it will progress towards 30:70 by 2030. Every year, around 5%.

Every year 5%.

Fair enough. I think those were my two questions.

That's it from my side. All the very best to you.

Thank you so much.

Good evening to the team. I have two questions.

My first question is as Ujjivan builds on its core in microfinance and affordable housing, how do you see the lending mix shifting over the next two to three years? What role will digital onboarding and fintech partnerships play in scaling inclusion and strengthening customer support?

That's my first question. I'll ask the second question after this.

Thank you. While we have given the overall guidance up to financial year 2030 in terms of the various components and building blocks of business that we will have, we are revisiting the issue and preparing a three-year strategy to further fine-tune it.

May I request you to please wait till we finalize our three-year plan, and then come up to you with a specific iteration. I would request you to just wait for some more for this quarter.

We'll be able to come back to you with greater details. Fine.

My second question is with strong capital adequacy and improving asset quality, how are you planning to sustain margins and cost efficiency as deposits and secured lending expand? How do you see digital cost efficiency shaping ROA and long-term profitability in the coming quarters?

Hi. This is Gaurav.

With the improvement in the overall parameters across the unsecured landscape, we have started to see the credit cost moderation, and that is leading to the increased profitability. The diversification, if you see the secured verticals, the new businesses that we had started to incubate around FY '25 starting, they have started to grow very well.

They'll soon add into the bottom line as well. We have trajectory for that.

Hence, the overall profitability will move in the tandem of, as Mr. Nautiyal also said, towards the FY '30 vision.

That's the overall thing that we're looking at. On the liability front also, just to add, we are looking to increase the CASA percentages, which has come up to 27% in this financial year.

We expect that to move towards 35% in our '30 '30 vision. All these things will play out, and we look to have a consistent kind of a profitability matrix.

Just to add here, our CASA franchise is showing very good growth. This year, we saw growth of 33.2% YoY and 7% QoQ.

We are confident of increasing CASA percentage going forward.

Thank you for the guidance, and I wish the team best of luck for the next quarter.

Oh, thanks so much. My question was on the collection team.

I see some reduction in the collection team starting to happen in this quarter, and now with normalized collection efficiencies across businesses, including microfinance, do you think what is the scope for optimizing this number too? That's the number one question.

Second is on the affordable housing disbursement. I can see some mild deceleration in this quarter on QoQ basis.

I can also see that in affordable housing, there is a 20 bps of yield decline on QoQ basis. Are they growth or pricing or competitive challenges in that particular segment, because that's a materially segment for us?

Rajiv, on the collection team, as you know that, we've had four quarters of increased slippages and, increased PAR, which is now coming under control, and we are now starting to show very good numbers on PAR as well as NPA. However, the entire stress has been in the microfinance book.

On microbanking, there is a long tail which we already we already have. We expect that in Q4, there will be no meaningful decline in the in the number of people in the manpower.

Q1 onwards, we will start to see a decline of between 100 to 150 people on a quarter quarter-to-quarter basis. On affordable housing, see, we've moved towards 15 lakh of average ticket size.

The decline in yield that you're seeing is largely because there has been a shift towards slightly higher ticket sizes, point number one. Point number two, there has also been increased competitive intensity in the market.

Got it. Thank you.

Thanks, and best of luck. There is, of course, Rajiv, something that I missed pointing out was repo cut which got passed on to customers.

That has also had an impact. The 20 basis points reduction is a factor of these three things.

Thanks.

Sir, a couple of questions. One is on the CGFMU side.

How much of the insurance that we have paid in this quarter, and what percentage of our incremental disbursements and loan book is getting covered under this?

Hi, Hitendra. This is Brajesh here.

CGFMU, we cover a smaller portion. We do decide on the quantum to be insured depending upon the risk-adjusted returns, and also we use this as a tail risk protection strategy.

As based on each quarter, looking at the quality and requirement, we cover some portion, but it's very limited. It's not a very high portion what we cover at this point in time.

Thank you.

How much is the insurance amount that we have paid in this quarter? This quarter

this quarter, we did ₹234 crores of coverage, with a premium payment of about ₹1.7 crore.

Okay. Secondly, sir, as per your guidance for FY '26, which is 10% to 12% of ROE, if we do a back calculation, the Q4 PAT has to see a meaningful jump by almost like 33% to almost 33% to 75% growth on a QoQ basis.

What could be the contributor towards such a sharp jump in the fourth quarter? Are we expecting a meaningful reduction in the credit cost, because you mentioned that NIM and opex are probably going to be in similar lines?

If you can comment on that.

We stand by our guidance whatever we have given. We are confident about it.

There will be two key factors, three key factors. First one is the dispersal will be at all-time high with microfinance as well as secured book totally firing.

Second point is the falling cost of funds. We have given a guidance cost of funds will fall further towards the 7% level.

Finally, the credit cost, as mentioned by our CCO, it is going to be much lower in Q4 as compared to Q3. All these factors will contribute to us reaching the figure which you mentioned.

Okay. Finally, sir, on micro mortgages, we have seen a very high growth in this segment in this quarter, both in terms of disbursements while we have also seen some PAR 0 increasing, maybe because of book seasoning.

What are the trends that you are seeing in this particular segment, because there are players who are facing challenges in this particular segment, but we are growing fast despite having a slightly higher PAR 0 on a quarter-on-quarter basis? If you can give some color on that.

Hi. This is Umesh.

As far as micro mortgages is concerned, as we said that our book is somewhere around 1,325-odd crores, and since the base itself is very low and we started around 18, 20 months back, this absolutely the full tenure of 12 months, we have seen in this last year only. That's why on the percentage terms, it looks very heavy, but the base itself is low and that's why it has showing.

Second, as far as NPAs are concerned, if we see that it was almost zero because the volume itself was negligible. As on date also, when we talk about, it is somewhere like, okay, 0.3%.

It is going to a little bit sort of matured once the portfolio will mature, but I think we are well under control on that. On the ground, are you seeing any challenges, sir, on this particular segment, because we seem to be growing fast here?

There are, couple of points which I would want to add. One is the Bucket X collection efficiency.

In terms of Bucket X collection efficiency, we have, since inception, never gone below 99.7%. Exit December, we were between 99.7% to 99.8% on the overall Bucket X collection efficiency, with 12 MOB being 99.9% and above.

Therefore, it's been a stable portfolio for us, with Bucket X is the beginning of all the, all the measurement that we do. Secondly, we also are aware of the fact that there is a slight amount of stress in the market in the lower ticket sizes.

We have, as a strategy, moved our average ticket size to 6.5 and above. Now we operate between 6 lakhs to 12 lakhs as the, as the predominant ticket size, with some cases happening below 6 and some happening above 12 also.

We are reducing our dependence on the lower ticket sizes, and we will see a steady growth in 6 to 12 lakh ticket size. In terms of geographies, we are now present in almost 260 to 270 branches.

Therefore, therefore, it is very well-diversified. We don't have any We don't have any dependence on any geography.

Fourthly, this is a non-DSA business, which is 100% self-sourced. Because of this reason, we also feel that, since this is sourced through branches, it should have a slightly better better asset quality.

Sorry, I mentioned 260 to 270 branches. We are at 317 now, 317.

I would like to add here in, as far as LTV is concerned, it is somewhere like 44%, 45% LTV that we operate in. One of the key emotional connect with the customer is 96% of such properties are SORP, self-owned residential properties.

That is giving us a comfort. DSA sourcing or through third party is negligible, all is in-house sourcing.

Hello. Thank you for the opportunity, and congratulations on stronger set of numbers.

Sir, firstly, on the opex decline, we mentioned that opex to assets ratio could decline from 6.7% in the next year, but in case Sorry, Chintan, we can't hear you.

Hello. Am I audible?

Thank you, sir, for the opportunity, and congratulations on strong set of numbers. Sir, firstly, on this opex decline which you are expecting in FY '27, opex to asset decline, this is even if we assume there is a universal bank license approval, despite that also, we will see a decline in the opex?

Would that be a fair assumption to make? Yeah.

Yes, it it is it should go in that direction, but as Mr. Nautiyal said that we're working on our plan, and we'll come back with the, final figures and guidance for FY '27 by the next quarter.

I would request you to let us give us some time on that. Sure.

Secondly, on this MFI piece, I think last quarter, we mentioned that the PAR was relatively elevated in a few states, namely Karnataka, West Bengal, and Bihar. Given that there is an improvement in the collection efficiency, what is the current status in all the three states?

Now the PAR has normalized across states, or do we still have any states where the PAR seems to be relatively on the higher side? Yeah.

Chintan, we have seen the collection efficiency in 10 out of 10 states at 99.6% and above in November as well as December. There was one blip in the month of October in the state of Gujarat that has also got recovered in November, December.

All our states are now above 99.6%. As a result, once the Bucket X collection efficiency is improved, the PAR percentages will start to show a gradual decline.

Just

one point is, last quarter we discussed that Karnataka was on improving trend, but there were scope for further improvement. Gujarat, we talked about North Gujarat where there had some issue.

Bihar was never an issue for us, and so far in this quarter also, Bihar has performed well.

Sure. Just one last thing on the margin front.

Assuming that we are now gradually moving every year by 5%, 5% almost towards a more secured mix, how do we expect the yields to trend from here on? Will that decline in the yields, assuming that we are moving from MFI to non-MFI, will that be largely compensated by cost, or we could also see some moderation in margins from a structural standpoint, 2-3 years standpoint, yeah?

Hi, Chintan. Chintan, we'll give you the guidance, but directionally, what we see is that yields will come down since the book mix will continue to shift.

However, there will be support of the lower cost of funds for the full year next financial year. That is the overall direction, but please wait for the guidance.

Sure. No worries.

Thank you, and all the very best, yeah. Thank you.

Yes, sir. Thank you for the opportunity, and congratulations, sir, for very good set of numbers.

My first question was related to our ROE, actually. Going forward, as our credit cost actually stabilize in next year, and even better in FY '28, and even our asset growth actually accelerates from here on, but I wanted to understand what are the key levers for ROE according to you, actually?

That is my first question. My second question was related to the slide number 20, where I was seeing the IL book, actually.

IL book, the PAR ratio is actually increasing. That was my second question, sir.

I'll take the PAR question first. As I was describing, the Bucket X collection efficiency in Q3 has been significantly better than Q2, with all 10 out of 10 states showing 99.6% and above and going up to 99.7% on an average in the month of December.

We have started seeing a very good revival in the Bucket X efficiency. Our PAR over a period of time will start to show a declining trend.

On IL specifically, we have seen the SMA book decline two consecutive months between October to November and November to December. This trend hopefully will continue, because we are not seeing any disturbance in the early bucket.

Okay. In IL, we've also seen that the collections in the SMA book has also improved, not just the Bucket X collection, but SMA collections have also started to see a very good improvement in Q3 compared to Q2.

That also gives us confidence that the PAR will not translate to NPA as it has been in the past, which is showing in our reduced slippages ratio. Sir, our PAR 90-plus has gone up from 2.3% to 2.7%.

That was my question, sir, on the IL front. This is on account of two things.

One, we had Karnataka which is largely responsible. We did have some stock which has moved to 90-plus, and yeah, this Karnataka has been the outlier.

Just to add, on IL, one unique thing compared to what you see in microfinance typical group loan, is in IL, your repayments in the SMA bucket is also very good compared to GL. As you collect better in SMA bucket, SMA 0, 1, and 2, the customers moving to NPA is on the lower side compared to GL, and that leads to lower write-off as well.

That is a good problem to have if your SMA bucket is a little swollen up, because you are having higher percentage of collection in this bucket. We are very comfortable in IL.

We have been seeing IL doing better than GL for the last five, six years, including pandemic and including the last year crisis, and we are very, very confident about IL going forward as well. Okay.

Basically, we will see stabilization trends at least in IL PAR 90-plus as what we can perceive from your commentary, right? Yes.

Okay. My second question, sir, was the key levers for our expansion in ROE, sir, from next year and even better in FY '28?

Sagar, we will leave you with the fact that our book mix changing in favor of select high-yield products, added to the fact that we will see credit cost coming down proportionate to the secured products that we run, and a concerted effort to build on our other income streams will give the comfort to maintain the ROE trajectory and guide that we are looking at. As we move forward, of course, we will see the benefit of cost of funds, supporting our ability to enter and grow the unsecured products as well.

Okay. Fine, sir.

Thank you so much, and all the best for future.

Hi. Good evening.

Am I audible? Yes, please.

Hello. Am I audible?

Yeah. Congratulations on a good set of numbers.

I just have two questions. The first one is purely data.

When I look at your presentation, page number 5, ROA for nine months is given as 1.1%, whereas in the results, it is given as 0.84%. I'm presuming that 1.1% is annualized and the other one is not.

Is that correct? Sorry, page number five and where?

Sorry. Page number 5 of the presentation, and in the results sheet for the nine months ended, you give return on assets average there also.

In the presentation and the results, both are uploaded on the website. I'm comparing the two, and I see return on assets as 0.84% in the results, quarterly results, whereas in the PPT on page number 5 5 being the five number written at the bottom, actually slide number 6 if I include the title slide, 1.1% is mentioned there.

I just wanted to understand, the difference is just that one is annualized, the other one is not? Maybe we'll check this and come back.

We'll reconcile if there is an error at our end. All right.

If I go with what's given in the results, that's 0.84%, and your guidance for this fiscal being 1.2% to 1.4%, now March is also a quarter where you will have your bonus payouts and everything. How confident are you with likelihood of additional employee-related opex that you will actually be able to hit the ROA guidance?

How do you see it quarter-on-quarter improving from there on? Because your vision is 1.8% to 2% eventually, but slowly, slowly you do need to reach 0.4% kind of quarter-on-quarter numbers.

Any comments on qualitative comments, quantitative on this year, but qualitative in long term, how do you see it panning out? On the payouts and all, just to tell you that we stand by our guidance, and we see that our range of 1.2% to 1.4% ROA will be met.

We're very confident about that, and any additional expenditure is already incorporated in that, so that we are very confident of falling in that range. Khushwant, just to confirm on the dual data that you mentioned, it is an annualized number which is reflecting in 1.1%.

I figured that. Thank you so much for that.

All the best. Yeah.

Thank you.

I 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. Thank you very much.