Utkarsh Small Finance Bank Q3 FY26: Net Loss ₹375 Cr, Loan Portfolio Contracts 3.9%
Utkarsh Small Finance Bank reported a Net Loss of ₹375 crore for Q3 FY26. Gross Loan Portfolio contracted by 3.9% YoY to ₹18,306 crore, while deposits grew 4.5% YoY to ₹21,087 crore. Secured lending now constitutes 50% of the loan portfolio. The bank successfully raised ₹950 crore via a rights issue in November 2025.
The net loss and contraction in the loan portfolio are significant negative indicators for the bank's performance. However, the strong capital adequacy and liquidity, along with the successful rights issue, provide some buffer, suggesting a medium impact rather than high.
The bank reported a net loss for the quarter and nine months, and the gross loan portfolio contracted. While there are positive aspects like deposit growth and an increase in secured lending, the overall financial performance is negative due to the losses.
Utkarsh Small Finance Bank Limited announced its un-audited financial results for the quarter and nine months ended December 31, 2025. The Board of Directors approved these results in a meeting held on February 02, 2026.
Key highlights for the quarter and nine months ended December 31, 2025, include a Gross Loan Portfolio contraction of 3.9% year-on-year to ₹18,306 crore. The share of secured lending grew to 50% as of December 31, 2025, from 41% a year prior. Deposits grew by 4.5% year-on-year to ₹21,087 crore, driven by a 23.8% year-on-year growth in Retail Term Deposits (RTD). The bank reported a Net Loss of ₹375 crore for Q3 FY26.
Mr. Govind Singh, MD & CEO, stated that Q3 FY26 was a quarter of strategic recalibration, focusing on portfolio quality and secured asset expansion. He noted the disciplined shift toward secured lending, the growth in non-JLG portfolios, and the increase in deposits, particularly retail term deposits and CASA. The bank adopted a cautious posture in the micro-banking segment due to stress in unsecured JLG portfolios, implementing tighter underwriting norms and moderated disbursement levels, which led to a planned contraction of the JLG book. Operational improvements were achieved, with JLG X-bucket collection efficiency rising to 99.5%. The bank also saw a ~140 bps QoQ reduction in the GNPA ratio as of December 25. Digital and automation sub-projects under the Utkarsh 2.0 program were launched to improve productivity and underwriting. Despite the net loss of ₹375 crore for the quarter, the bank exited with a strong capital adequacy ratio of 20.1%, supported by a ₹950 crore rights issue completed in November 2025. Liquidity remained robust with an LCR of 207% and surplus liquidity of nearly ₹4,700 crore.
Financial highlights also show deposits grew to ₹21,087 crore as of December 31, 2025, with retail term deposits reaching ₹12,586 crore and CASA deposits at ₹4,611 crore. The CASA deposits ratio increased to 21.9%. The bank’s CD ratio improved to 79.4%. Gross NPAs declined to 11.0% and Net NPAs to 4.5% as of December 31, 2025. The bank reported a pre-provision operating loss of ₹44 crore in Q3 FY26, compared to a profit of ₹185 crore in Q3 FY25. For the nine months of FY26, the bank reported a net loss of ₹963 crore, a significant change from a profit of ₹21 crore in 9M FY25.
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