Utkarsh Small Finance Bank (UTKARSHBNK) Q4 25/26 earnings summary

Executive summary

• FY 2026 was marked by a strategic shift toward stability, quality, and resilience, with a focus on secured, higher-yield, lower-risk portfolios and operational discipline.

• Significant leadership changes occurred, including new appointments and the re-appointment of an Independent Director.

• The Board approved audited financial results for FY26 with an unmodified audit opinion.

• FY26 saw a net loss due to elevated provisions and market disruptions in microfinance, with cost-to-income ratio surging and operational inefficiencies noted.

• The bank is positioned for sustainable growth, with FY 2027 seen as a consolidation year to build on recent improvements.

Financial highlights

• Net loss after tax for FY26 was ₹1,15,097.84 lakh, primarily due to higher NPAs and provisions, compared to a net profit of ₹2,370.05 lakh in FY25.

• Net interest income for FY26 dropped 27% year-over-year to ₹1,477 crore; total income rose to ₹4,36,476.03 lakh.

• Operating profit before provisions for FY26 was ₹23,397.62 lakh, down from ₹1,16,673.30 lakh in FY25.

• Total deposits grew 0.4% year-on-year to ₹21,654 crore; retail term deposits up 20% year-on-year.

• Provisions and contingencies rose sharply to ₹1,56,296.34 lakh in FY26 from ₹97,928.48 lakh in FY25.

Outlook and guidance

• Loan book growth targeted at 25%-30% annually, with secured lending to comprise around 55% of the portfolio.

• Aims to maintain NIM above 8% and deliver ROE of around 15% by FY 2028.

• Net NPA ratio expected to fall below 1% by FY 2028, from 3.3% in FY 2026.

• Deferred tax asset of ₹35,581.80 lakh recognized based on future taxable profit projections.

• Management is awaiting NCLT approval for the amalgamation with Utkarsh CoreInvest Limited.