Utkarsh Small Finance Bank Share Price Dips 5.97%; Reports 28.3% Loan Portfolio Growth in H1 FY 2025

Utkarsh Small Finance Bank announced financial results for the quarter and half year ended on September 30, 2024.

Key Financial Highlights for Q2 and H1 FY 2025

The Bank’s loan portfolio expanded by 28.3% year-over-year, reaching ₹19,101 crore as of September 30, 2024. The share of secured loans in the overall portfolio rose to 38%, up from 35% on June 30, 2024, and 34% on March 31, 2024. This growth reflects Utkarsh Bank’s ongoing efforts to diversify its lending base and shift toward a more secured portfolio structure.

Deposits increased by 39.6% year-over-year, amounting to ₹19,496 crore, driven primarily by strong growth in Retail Term Deposits (RTD), which surged 47.6% year-over-year. Gross Non-Performing Assets (NPAs) stood at 3.88%, while Net NPAs were reported at 0.89%, reflecting prudent asset quality management by the Bank.

Operating profit (pre-provisions) in H1 FY 2025 was ₹588 crore, marking a 28% increase from the previous year, while operating profit for Q2 FY 2025 stood at ₹276 crore, a 16% year-over-year increase. The Bank’s profit after tax (PAT) reached ₹189 crore for H1 FY 2025 and ₹51 crore for Q2 FY 2025. The Return on Assets (ROA) and Return on Equity (ROE) were recorded at 1.5% and 12.3%, respectively, in H1 FY 2025, and 0.8% and 6.6% for Q2 FY 2025.

Utkarsh Small Finance Bank’s current footprint is across 26 states and Union Territories. The Bank now operates 967 banking outlets, servicing a customer base of over 48 lakh. During H1 FY 2025, the Bank added 79 new branches, including 51 in Q2 FY 2025 alone, to meet the growing demand for financial services across regions.

Management Commentary

Commenting on the results, the MD and CEO, Mr Govind Singh, said, “Q2, FY25 has been a challenging quarter for microfinance sector wherein collection efficiency and disbursements, both, were significantly impacted on account stress which started from heatwave & operating limitations during general elections in Q1, FY25 to higher borrower level leverage and credit supply tightening for underlying micro-banking borrowers on account implementation of MFIN guard rail norms and a general slowdown in disbursement by the microfinance sector.” 

He further added, “We continue to work on strengthening our collection efforts further to improve collection efficiency. On the positive side, we continue to witness healthy growth in the non-microbanking loan portfolios and a consistent increase in the share of the secured loan portfolio. We have also been able to optimise our disbursement yields in secured lending by 50-80 bps for housing and MSME portfolios. Our deposits have also grown by a healthy pace of 40% YoY, deposits growth was led by retail term deposits growth”. 

On November 11, 2024, Utkarsh Small Finance Bank share price opened at ₹36.36, down from its previous close of ₹40.85. At 9:34 AM, the share price of Utkarsh Small Finance Bank was trading at ₹38.41, down by 5.97%.

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