Utkarsh Small Finance Bank Ltd Share Price – NSE  / BSE

Banks, Small Cap

The agency has reaffirmed its '[ICRA] A1+? rating on the short-term bank facilities of the bank.

ICRA stated that the revision in the outlook to ?negative? considers the significant deterioration in Utkarsh Small Finance Bank?s (Utkarsh) asset quality and earnings profile in FY2025 and the subdued performance expected in the near term.

The deterioration in the asset quality was primarily on account of higher slippages in the microfinance portfolio due to various factors including, but not limited to, overleveraging by borrowers, worsened credit discipline, adverse climatic conditions and other operational challenges like employee attrition.

ICRA takes note of the corrective measures being taken by the bank. Although incremental inflow to the special mention account (SMA) bucket has slowed down, the near-term performance shall remain monitorable considering the tightened guardrails for the microfinance sector. Further, the asset quality in Utkarsh?s relatively newer product segments remains monitorable, given the sizeable scaleup in the last 2-3 years.

Given the deterioration in the asset quality, the bank?s solvency has weakened. However, Utkarsh continues to maintain an adequate capitalisation profile. Further, it is in the process of raising Tier I equity capital up to Rs 750 crore in the near-term, which shall help it maintain a prudent capitalisation profile while providing for the deterioration in the asset quality.

ICRA also takes note of the gradual improvement in Utkarsh?s deposit franchise with the share of retail deposits (retail term deposits + current account savings account (CASA)) increasing to 71% as of March 2025 from 66% as of March 2024. The share of CASA in total deposits stood at 22% as on 31 March 2025, similar to the March 2024 level.

Going forward, the bank?s ability to improve the share of the relatively lower-cost CASA deposits and keep the deposit profile granular shall remain important.

Utkarsh Micro Finance received a small finance bank (SFB) licence from the Reserve Bank of India (RBI) in November 2016 and completed the conversion to an SFB in January 2017. Operating in 27 states/Union Territories (UTs), as on 31 March 2025, Utkarsh offers deposits, micro-banking loans, micro, small and medium enterprise (MSME) loans, affordable housing loans and corporate loans, among other products.

The scrip had gained 0.17% to end at Rs 23.52 on the BSE today.

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Net profit of Utkarsh Small Finance Bank declined 98.14% to Rs 2.97 crore in the quarter ended March 2025 as against Rs 159.66 crore during the previous quarter ended March 2024. Total Operating Income declined 1.79% to Rs 879.62 crore in the quarter ended March 2025 as against Rs 895.62 crore during the previous quarter ended March 2024.

For the full year,net profit declined 95.24% to Rs 23.70 crore in the year ended March 2025 as against Rs 497.63 crore during the previous year ended March 2024. Total Operating Income rose 18.45% to Rs 3764.93 crore in the year ended March 2025 as against Rs 3178.41 crore during the previous year ended March 2024.

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Utkarsh Small Finance Bank will hold a meeting of the Board of Directors of the Company on 3 May 2025.

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On a sequential basis, the bank?s loan book registered a growth of 3.2%. The gross loan portfolio as of 31 December 2024 stood at Rs 19,057 crore.

Total deposits of the bank amounted to Rs 21,566 crore as of 31 March 2025, reflecting a 23.42% YoY increase and a 6.9% QoQ rise.

Retail term deposits and bulk term deposits totaled Rs 10,635 crore (up 33.5% YoY) and Rs 6,238 crore (up 5.3% YoY), respectively.

The CASA ratio stood at 21.8% as of 31 March 2025, compared to 20.5% as of 31 March 2024 and 19.7% as of 31 December 2024.

Collection efficiency (excluding pre-payments) for the bank?s micro banking loan portfolio for Q4 FY25 was 99.1%.

The liquidity coverage ratio (LCR) stood at 193% as of 31 March 2025.

Utkarsh Small Finance Bank is engaged in providing banking and financial services with a focus on providing financial services to the underserved and unserved sections. The bank's microfinance lending activities are primarily focused in rural and semi-urban locations of the country, while its other services are spread across the country.

The bank reported a net loss of Rs 168.05 crore in Q3 FY25 as against a net profit of Rs 116.06 crore recorded in Q3 FY24. Total income jumped 16.8% year on year (YoY) to Rs 1,037.92 crore in the quarter ended 31 December 2024.

The scrip declined 4.89% to currently trade at Rs 22.15 on the BSE.

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