Utkarsh Small Finance Bank (UTKARSHBNK) Q3 25/26 earnings summary

Executive summary

• The quarter was marked by recalibration and resilience amid regulatory changes and legacy stress, with a focus on stability and quality over short-term growth.

• Net loss for the quarter was ₹37,501.76 lakh (INR 375 crore), with a 9M FY26 net loss of ₹96,296.28 lakh (₹963 crore), compared to a profit in the prior year period.

• Operating profit turned negative at ₹(4,427.74) lakh in Q3 FY26, down from a profit in the prior year.

• Results were impacted by disruptions in the microfinance segment, though secured asset growth and deposit build-up continued.

• Un-audited financial results for the quarter and nine months ended December 31, 2025, were approved by the Board and reviewed by statutory auditors, with an unmodified conclusion issued.

Financial highlights

• Gross loan portfolio declined 3.9% YoY to ₹18,306 crore; non-JLG loans grew 28% YoY, while JLG loans fell 34.1% YoY.

• Total deposits rose 5% YoY to ₹21,087 crore, with retail term deposits up 24% and CASA deposits up 16% YoY.

• Net interest income dropped 32% YoY in 9M FY26; operating income fell 26% YoY.

• Cost-to-income ratio surged to 110.3% for Q3 FY26; provisioning increased 74% YoY for 9M FY26.

• Capital adequacy ratio stood at 20.11% as of December 31, 2025.

Outlook and guidance

• Targets loan book growth of 25%-30% over the next 2-3 years, with secured lending above 50%.

• NIM guidance of around 8.5% and ROE of 15% by FY 2028; ROE expected at 10% for FY 2027.

• Credit cost expected at 3%-3.5% for FY 2027, declining to 2.5% by FY 2028.

• Cost-to-income ratio to decline from 110% to 57% by FY 2028, with no new branches planned.

• The Board has approved a draft scheme of amalgamation with Utkarsh Core Invest Limited, with the appointed date as April 1, 2025, pending NCLT approval.