Utkarsh Small Finance Bank Share Price Rises After ₹355 Crore NPA Sale Decision

Utkarsh Small Finance Bank (USFBL) witnessed a 2.5% rise in its share price early on December 30, 2024, reaching an intraday high of ₹35.80 by 9:19 AM. This surge came after the bank’s Management Committee approved the sale of a portfolio of non-performing assets (NPAs) and written-off loans to an asset reconstruction company (ARC) during a meeting held on December 27, 2024.

Details of the NPA Portfolio Sale

The portfolio comprises unsecured stressed microfinance institution (MFI) loans with an aggregate outstanding principal of approximately ₹355 crore as of September 30, 2024. The proposed sale will take place at a reserve price of ₹52 crore, consisting of cash and security receipts.

Financial Performance Highlights

In the September quarter of FY25, USFBL reported a standalone net profit of ₹51.39 crore, marking a 55% decline year-on-year. This drop occurred despite a 26.47% rise in total income to ₹1,089.54 crore.

Asset Quality Trends

The bank’s gross NPAs increased to ₹718.74 crore, up from ₹403.53 crore in the same quarter last year. Meanwhile, net NPAs rose to ₹159.97 crore from ₹21.64 crore. The gross NPA ratio also climbed to 3.88% in Q2 FY25 compared to 2.81% in Q2 FY24.

About Utkarsh Small Finance Bank (USFBL)

Headquartered in Varanasi, USFBL is a subsidiary of Utkarsh Core Invest Limited (UCL), a non-banking financial company (NBFC-NDSI-CIC) registered with the Reserve Bank of India (RBI). The bank commenced operations on January 23, 2017, after receiving an RBI licence on November 25, 2016.

Loan Portfolio and Operations

The bank primarily offers microfinance loans through the Joint Liability Group (JLG) model, which formed nearly 61% of its gross loan portfolio as of June 30, 2024. It also provides wholesale loans, MSME loans, and housing loans, along with microfinance loans through Business Correspondence activities. As of June 30, 2024, USFBL’s gross loan portfolio stood at ₹18,798 crore.

Geographical Presence and Infrastructure

The bank operates across 22 states and four union territories, maintaining 916 banking outlets, 321 ATMs, and 641 micro-ATMs as of June 30, 2024.

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