Utkarsh Small Finance Bank has reported a net loss of Rs 239 crore for the quarter ended June 30, 2025, as the bank continued its strategic realignment towards secured lending.
The financial results were approved by the Board of Directors at a meeting held on the same day.
During the quarter, the bank’s gross loan portfolio grew by 2.3 per cent year-on-year to Rs 19,224 crore, while total deposits rose by 18.3 per cent to Rs 21,489 crore, driven largely by a 33.7 per cent increase in retail term deposits.
The bank now operates through 1,099 branches across 27 states and union territories.
The shift in lending focus led to a rise in secured loans, which now account for 45 per cent of the total portfolio, up from 35 per cent a year ago, reflecting the bank’s continued emphasis on de-risking its balance sheet and improving asset quality.
Govind Singh, Managing Director and CEO, stated that despite the challenging operating environment, the bank maintained strong momentum in its non-JLG (Joint Liability Group) portfolio, which grew 39 per cent year-on-year.
He noted that the bank’s efforts in optimising yields within secured loan segments have resulted in higher disbursement yields in housing and MSME loans by 40 to 150 basis points compared to the same period last year.
However, the bank adopted a cautious approach towards unsecured micro-banking due to emerging stress signals, which impacted short-term interest income but aligns with its long-term strategy to preserve asset quality.
The bank’s microfinance (JLG) loan book shrank during the quarter due to stricter lending norms and improved borrower leverage, resulting in lower exposure to the segment.
On the deposit front, the bank performed well despite a softening interest rate environment. Retail term deposits grew to Rs 11,675 crore, and CASA (Current Account Savings Account) deposits rose by 22.5 per cent year-on-year to Rs 4,229 crore.
The CASA ratio improved marginally to 19.7 per cent as of June 30, 2025, compared to 19.0 per cent a year earlier. The credit-deposit (CD) ratio improved to 83.4 per cent from 92.7 per cent over the same period.
However, asset quality indicators showed strain. Gross Non-Performing Assets (NPAs) rose to 11.42 per cent from 9.43 per cent at the end of March 2025, and significantly higher than the 2.78 per cent reported in the previous year.
Net NPAs also increased to 5.00 per cent from 4.84 per cent three months earlier, and up from 0.26 per cent a year ago. The bank’s pre-provision operating profit (PPoP) for the quarter stood at Rs 92 crore, sharply down from Rs 311 crore in Q1 FY25.
Despite the loss, Utkarsh Small Finance Bank maintained a strong capital position, with a Capital to Risk-weighted Assets Ratio (CRAR) of 19.64 per cent and Tier 1 capital at 16.71 per cent.
Utkarsh SFB remains confident in its long-term strategy and is focused on improving margins and scaling operations as its newer branches mature.
Incorporated in April 2016 and operational since January 2017, Utkarsh Small Finance Bank continues to focus on serving underserved and rural markets across India.
Headquartered in Varanasi, the bank offers savings and term deposits, digital banking services, and loans, including JLG, MSME, housing, and vehicle finance.
Through its transformation strategy, the bank aims to build a more resilient portfolio while maintaining its commitment to inclusive banking across the country.
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