UTKARSHBNKNSEMay 15, 2026

Utkarsh Small Finance Bank Limited

6,758words
87turns
7analyst exchanges
7executives
Management on call
Govind Singh
MANAGING DIRECTOR AND
Sarjukumar Pravin Simaria
CHIEF
Amit Acharya
CHIEF RISK OFFICER – UTKARSH SMALL FINANCE BANK LIMITED
Virender Sharma
HEAD MICRO-BANKING – UTKARSH SMALL FINANCE BANK LIMITED
Sourabh Ghosh
HEAD – CONSUMER BANKING
Abhay Kataria
HEAD ASSETS -- UTKARSH SMALL FINANCE BANK LIMITED
Chintan Shah
ICICI SECURITIES
Key numbers — 40 extracted
58%
sements improved across both JLG and non-JLG segments in quarter 4 FY '26: JLG disbursements grew 58% quarter-on-quarter and 2% year-on-year, while non-JLG disbursements grew 41% quarter-on-quarter a
2%
h JLG and non-JLG segments in quarter 4 FY '26: JLG disbursements grew 58% quarter-on-quarter and 2% year-on-year, while non-JLG disbursements grew 41% quarter-on-quarter and 51% year-on-year. These
41%
G disbursements grew 58% quarter-on-quarter and 2% year-on-year, while non-JLG disbursements grew 41% quarter-on-quarter and 51% year-on-year. These improvements will expand the portfolio base going
51%
arter-on-quarter and 2% year-on-year, while non-JLG disbursements grew 41% quarter-on-quarter and 51% year-on-year. These improvements will expand the portfolio base going forward and reflect a calib
99.7%
ing activity. At the same time, our X-Bucket collection efficiency in the JLG segment improved to 99.7% in March 2026, up from 98.5% in April 2025, the highest level in the last 4 quarters – a direct o
98.5%
e, our X-Bucket collection efficiency in the JLG segment improved to 99.7% in March 2026, up from 98.5% in April 2025, the highest level in the last 4 quarters – a direct outcome of strengthened field
INR170 crore
eted collection initiatives. Fresh NPA slippages (net of recoveries and upgradations) reduced to ~INR170 crores in quarter 4 of FY '26 against ~INR710 crores in the quarter 4 of FY '25. Our GNPA ratio improve
INR710 crore
es (net of recoveries and upgradations) reduced to ~INR170 crores in quarter 4 of FY '26 against ~INR710 crores in the quarter 4 of FY '25. Our GNPA ratio improved by ~330 basis points quarter-on-
330 basis point
uarter 4 of FY '26 against ~INR710 crores in the quarter 4 of FY '25. Our GNPA ratio improved by ~330 basis points quarter-on- quarter to 7.7% as on March '26. These are the early, measura
7.7%
Y '25. Our GNPA ratio improved by ~330 basis points quarter-on- quarter to 7.7% as on March '26. These are the early, measurable signs that our corrective actions are beginning
28%
avenues for growth beyond JLG lending. We have consciously moderated our JLG exposure to around 28% of the Gross Loan book (and around 30% including BC JLG) as on March 2026, down from nearly 88% (
30%
We have consciously moderated our JLG exposure to around 28% of the Gross Loan book (and around 30% including BC JLG) as on March 2026, down from nearly 88% (and 90% including BC JLG) in March 2020
Guidance — 20 items
Govind Singh
opening
“These improvements will expand the portfolio base going forward and reflect a calibrated return to lending activity.”
Govind Singh
opening
“We expect cost of funds to reduce further as repricing continues to take effect.”
Govind Singh
opening
“Our Utkarsh 2.0 technology transformation project is delivering tangible benefits in automation, productivity and risk control.”
Govind Singh
opening
“Our near-term priorities will be to sustain improved collection performance, continue calibrated disbursements into higher-quality segments, deepen secured lending and accelerate liability mobilization to support growth in the prudent manner.”
Govind Singh
opening
“In the coming years, we are aiming for loan book growth of 25% to 30%, with secured lending comprising around 55% of the portfolio, maintaining NIMs of above 8% and delivering a ROE of around 15%.”
Govind Singh
opening
“While sectoral headwinds and regulatory transitions may continue to influence near-term performance, we remain confident that the strategic direction we have charted will deliver a stronger, more sustainable franchise over the medium term.”
Sagar Shah
qa
“Now next year from FY '28 onwards, we are migrating to ECL based provisioning.”
Sarjukumar Simaria
qa
“I guess it will be some time before RBI brings us into that.”
Sarjukumar Simaria
qa
“But to your question on preparedness for Ind AS next year, it doesn't apply to us in terms of statute requirement.”
Sarjukumar Simaria
qa
“With this trajectory of slippages being arrested significantly in terms of SMA going down significantly, with the background that the new disbursements are happening under the new guardrail with the background that we have a CGFMU cover, I guess this is a very conservative number, but we will still stick to the fact that it will be around 3% for FY '27 to 2% to 2.5% in FY '28.”
Risks & concerns — 15 flagged
The fourth quarter of FY '26 has been a period of renewed growth, proof of resilience and cautious optimism.
— Govind Singh
And, as part of the industry, we also went through adverse impact of MFI segment, as you are aware, guardrails for a longer period of 1.5 years.
— Govind Singh
FY '26 began under the shadow of legacy stress and a cautious environment.
— Govind Singh
A central theme of FY '26 has been structural de-risking of our unsecured exposure and a strategic pivot toward secured and higher yield, lower risk portfolios.
— Govind Singh
This structural shift is already changing the risk profile of the bank and will, over time, enhance stability of margins.
— Govind Singh
To further de-risk incremental flows, we have registered with CGFMU for credit guarantee coverage on eligible JLG and MBBL disbursements with effect from 17th January, 2025.
— Govind Singh
This coverage materially reduces incremental portfolio risk on new disbursements and supports portfolio stability as we scale higher quality, secured products.
— Govind Singh
We reported a net loss of INR188 crores for the quarter, driven by provisioning for legacy stress.
— Govind Singh
In parallel, we proactively addressed legacy stress through the ARC Sale of stressed JLG portfolio.
— Govind Singh
Our Utkarsh 2.0 technology transformation project is delivering tangible benefits in automation, productivity and risk control.
— Govind Singh
These investments are not only improving the efficiency, but also enhancing our ability to underwrite and monitor risk at scale.
— Govind Singh
Throughout FY '26, we took a range of decisive actions to address legacy stress and position the Bank for sustainable growth.
— Govind Singh
These actions, taken together, are designed to reduce the probability of future stress and to create a more diversified, resilient earnings base.
— Govind Singh
Achieving these targets will require steady execution across underwriting, collections, product diversification, liability mobilization and technology-enabled risk management.
— Govind Singh
In essence FY '26 has been a year of challenge and purposeful transformation.
— Govind Singh
Q&A — 7 exchanges
Q
Congratulations to the management for posting at least better set of earnings as compared to few quarters. Sir, I had some few questions. My first question was related to our asset quality. On the asset quality, you have mentioned the PCR on the bank level of around 59%. I wanted to understand what is the PCR that we are holding for secured as well as unsecured both of them individually?
Govind Singh
Yes, sure sir, Amit, can you just mention that. Amit this side. So, if you see on the overall book, PCR is 59.3%, as you mentioned. On the entire secured book, it stood at 39.0% and on entire unsecured, it stood around 65.4%. Okay. So, 64.5% that you are saying is for -- is it safe to assume that includes MSME unsecured as well as MFI, right? Yes, right. But for... 65.4% sorry, when I mentioned unsecured 65.4%, it includes all unsecured loans, including MFI. Right, sir. So only for MFI, what is the PCR that you're holding, sir, now? Only for JLG if you see it would be 66.3%. Only for JLG and f
Q
I wanted to ask what is the amount that we are going to get back in CGFMU cover in the last 1 year that insurance that we have taken for MFI?
Sarjukumar Simaria
So, the way it happens that I would say the maturity of NPA as we speak, I think still it's not an NPA that the disbursement that we have started, while our portfolio as of 31st March, 70% is covered under CGFMU, but the maturity of claim has yet not arrived. I guess I would hope it doesn't arise, frankly. But maybe 1.5 years, it takes the claim and the settlement, but we are also not even wanting to account this credit. And therefore, the entire numbers that we have said is without even considering the credit at this point because that's kind of an experience, and we don't want to set into a
Q
Just one question. What are our capital raise plans?
Govind Singh
Immediately, we are not having any plans for capital raise. I know, it is 17.7% but I think, this year we should be able to sail through on this capital base. Our idea is to first focus more on the at least when I'm talking, so when I say capital raise means I'm not talking equity capital. Obviously, we have other means of taking capital like tier-2 capital and sometime offloading some of the balance sheet items also. Idea is to not go to capital market on immediate basis and raise through tier two or some other means this time, in case there are any shortfall or immediate requirement is there
Q
Actually, my question only is that in the last con call, the management has mentioned, we are targeting for 15% ROE in FY '28. I want to know only are you in line on that path? Also what I hope is that worst is behind. That is the only question from my side.
Govind Singh
I'll confirm that 15% if you're looking FY '28 and certainly we are there. We'll exit FY '28 above 15% ROE. As far as worst is behind, yes, the worst is behind us. I mean, you must have seen, the type of provisioning even if you have to take for quarter four also, it is largely on the legacy portfolio. I mean, we are creating a new good portfolio because of guardrails also. Also, we have got a guarantee cover issued. We don't foresee much challenge going forward. Whatever provisioning you have seen, off late or maybe this quarter also is largely on account of the legacy portfolio.
Q
By when we are planning to reach net NPA ratio of less than 1% and how are you planning to provide provisions for the same?
Govind Singh
Can you just repeat the question? We can not hear it properly. Can you just repeat little louder, please? Can you hear me? Now it is better. By when are you planning to reach net NPA ratio of less than 1%? Because before the crisis I think as we are operating in the range of 0.3% to 0.5%, and how are we planning to provide provisions to reach this ratio? If you can provide some more. I think FY '28 is what we expect that we should be reaching this range and one obviously through, reduction in the overall NPA, recovering whatever are the NPA of past, whatever % is possible. Certainly, as you ca
Q
Sir, one question. On the non-mfi slippages, it has been running still high, about 4 odd %. If you would just kind of tell us, what is driving this number?
Govind Singh
Mahesh. Amit, our CRO, is just about to respond to you. Yes, no issues. If you see the non-MFI space or retail space, Wheels has been one of the problem area for us in the past, which we are trying to address. If you see the collection efficiency or the resolution percentages across the buckets in the last 3, 4 months, since November onwards, we have controlled the NPA percentages. But yes, we need to bring it down drastically. The resolution in the earlier buckets. Flowing into NPA bucket, the SMA 1 and 2, we have tried to arrest it and which we have done successfully. Second is that the port
Q
Thank you, ICICI team for this, and thanks to all the investors for your continued support. As you have seen, I think, things have changed significantly during last few quarters, and we expect that next few quarters should be a significant improvement in the trajectory. As we have mentioned that for FY '28, at least in the next two years' time, we should be back to 15% ROE and good overall returns across all KPIs. Thank you for your support, and we will keep exploring and keep talking to you. Thank you. Thanks a lot.
Management
Speaking time
Govind Singh
16
Amit Acharya
13
Sagar Shah
12
Sarjukumar Simaria
11
M. B. Mahesh
10
Moderator
9
Shivam Singh
6
Bhumin Shah
4
Virender Sharma
2
Chintan Shah
1
Opening remarks
Chintan Shah
Yes. Hi, Gitesh. Thank you. Good evening, everyone, and welcome to the Q4 FY '26 Results Conference Call of Utkarsh Small Finance Bank. We would like to thank the management for giving us the opportunity to host this call. From the management, we have Mr. Govind Singh, Managing Director and CEO; Mr. Sarjukumar Pravin Simaria, Chief Financial Officer; Mr. Amit Acharya, Chief Risk Officer; Mr. Virender Sharma, Head Micro Banking; Mr. Sourabh Ghosh, Head Consumer Banking; and Mr. Abhay Kataria, Head of Assets. Yes. So now without further ado, I would like to hand over the floor to the management. Thank you, and over to you, Govind sir.
Govind Singh
Yes. Thank you, Chintan. Thanks a lot. Thanks for hosting this call. Thank you, everyone, for joining our quarter 4 FY '26 Earnings Call. The fourth quarter of FY '26 has been a period of renewed growth, proof of resilience and cautious optimism. And, as part of the industry, we also went through adverse impact of MFI segment, as you are aware, guardrails for a longer period of 1.5 years. However, for us, FY '26 has been a year of deliberate choices – prioritizing stability over speed, quality over quantity and resilience over short-term expansion – so that we emerge with a fundamentally stronger, less cyclical franchise that can deliver sustainable returns over the medium and long term. FY '26 began under the shadow of legacy stress and a cautious environment. Over the course of the year, we focused on stabilizing collections, tightening underwriting and rebalancing the portfolio mix. These actions were designed to arrest deterioration, reduce fresh slippages and create the conditions
← All transcriptsUTKARSHBNK stock page →