CARE Reaffirms Ujjivan SFB’s AA- Rating Amid Shift to Secured Lending

Ujjivan Small Finance Bank Ltd. ( (IN:UJJIVANSFB) ) just unveiled an announcement.

Ujjivan Small Finance Bank has had its CARE AA-; Stable ratings reaffirmed for ₹500 crore of long-term bank facilities, ₹500 crore of non-convertible debentures, and ₹10,000 crore of fixed deposits, reflecting comfortable capitalisation and an expanding, more diversified loan book. The bank is reducing dependence on micro-banking by growing secured loans, which reached 48% of the portfolio by December 31, 2025, and despite micro-banking stress impacting asset quality and compressing margins and returns, asset quality metrics remain contained and the stable outlook factors in expectations of improved profitability as scale, efficiencies, and funding profile strengthen over time.

Loan growth rebounded to about 15% in the first nine months of FY26, driven by secured segments and a gradual recovery in microfinance, even as slippages rose and return on total assets fell to 1.10% from 3.50% in FY24 due to higher credit costs and operating expenses. CARE notes that upgrades could follow if Ujjivan significantly scales up profitably with deeper secured loan diversification and a stronger CASA base, while downgrades could be triggered by sustained sub-1% returns, material asset quality deterioration, or capital adequacy falling below 18%, underscoring the importance of execution on its transition strategy for investors and depositors.

More about Ujjivan Small Finance Bank Ltd.

Ujjivan Small Finance Bank Limited is an Indian small finance bank focused on serving financially underserved segments through micro-banking and retail lending. The bank is steadily diversifying from predominantly unsecured microfinance loans toward a higher share of secured lending, aiming to strengthen portfolio stability and improve its long-term funding and profitability profile.

Average Trading Volume: 1,459,611

Technical Sentiment Signal: Buy

Current Market Cap: 103.4B INR

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