Utkarsh Small Finance Bank (UTKARSHBNK) investor relations material

Executive summary

• FY 2026 was marked by a strategic transformation prioritizing stability, quality, and resilience, with a deliberate shift toward secured, higher-yield, lower-risk portfolios and significant reduction in JLG exposure.

• Operational and technological investments, including Utkarsh 2.0 and new core banking systems, enhanced risk control, productivity, and digital innovation.

• Rights issue of approximately ₹950 crore in November 2025 and ARC sale of stressed assets strengthened the capital base and balance sheet.

• Significant leadership changes occurred, including new appointments and re-appointments at the Board and senior management levels.

• Audited financial results for FY26 were approved with an unmodified audit opinion from joint statutory auditors.

Financial highlights

• FY26 ended with a net loss of ₹1,15,097.84 lakh, driven by elevated provisions and legacy stress, despite total income rising to ₹4,36,476.03 lakh.

• Operating profit before provisions for FY26 was ₹23,397.62 lakh, down sharply from the previous year.

• Gross NPA ratio improved to 7.7% as of March 2026, while net NPA ratio was 3.3%.

• CASA ratio improved to 24%, with CASA plus retail term deposits at 83% as of March 2026.

• Capital adequacy ratio stood at 17.7% as of March 31, 2026.

Outlook and guidance

• FY 2027 is expected to be a consolidation year, targeting 25%-30% annual loan book growth, with secured lending to comprise ~55% of the portfolio.

• NIM is expected to remain above 8%, with ROE targeted at ~15% by FY 2028.

• Net NPA ratio is expected to fall below 1% by FY 2028, with credit cost guidance of ~3% for FY 2027, reducing to 2.5% in FY 2028.

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

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