Shares of Utkarsh Small Finance Bank plunged nearly 15 percent on February 17, reaching an all-time low of Rs 24 per share. This dramatic drop followed the bank's announcement of a net loss of Rs 168 crore for the third quarter of FY25, a sharp decline from the Rs 116 crore profit reported in the same period the previous year. The results were disclosed after market hours on February 14, and the stock saw a significant dip when the market reopened after the weekend.
The bank's asset quality also worsened significantly. The net non-performing assets (NPA) surged to Rs 457.69 crore in Q3 FY25, up from just Rs 29 crore in Q3 FY24. This sharp rise in NPAs resulted in a worsened net NPA margin of 2.5 percent. Additionally, Utkarsh Small Finance's net interest income saw a slight decline, falling to Rs 480 crore for the reported quarter, down from Rs 482 crore in Q3 FY24.
In terms of growth, the bank's gross loan portfolio grew by 16.2 percent year-on-year, reaching Rs 19,057 crore, while its deposits increased by 34 percent to Rs 20,172 crore as of December 31, 2024. Despite these increases, the bank faced challenges in the operating environment, especially within the micro-banking sector. The tightening of credit supply due to new guard rail norms had a significant impact on micro-banking borrowers, leading to higher provisioning in the quarter.
Govind Singh, Managing Director and CEO of Utkarsh Small Finance Bank, addressed the results, highlighting that while the guard rail advisory had affected disbursements, it was a structurally positive step for the sector, which would benefit in the near future. He also noted that the bank was seeing stabilization in collection efficiency and expected improvement in the coming quarter, as well as in the first quarter of the next financial year.
After hitting its lowest point, the bank's stock recovered slightly, trading at Rs 25.44 per share by 11 am on February 17. Despite the recovery, it was still down nearly 10 percent from its previous closing price and remains over 61 percent lower than its 52-week high of Rs 61.97 per share.
