Utkarsh Small Finance Bank posts Rs 34 crore Q1 loss; asset quality stress persists

Utkarsh Small Finance Bank on Saturday reported a Rs 34 crore net loss in the first quarter of the fiscal, continuing its loss making streak for the fifth consecutive quarters on account of high asset quality stress.

The extent of loss however moderated from a net loss of Rs 188 crore in the fourth quarter and Rs 240 crore in the year ago period. The narrowing of loss was helped by lower provisions which came down to Rs 109 crore in the reporting quarter from Rs 411 crore in the corresponding period last year.

Its operating profit however stood lower at Rs 64 crore against Rs 92 crore earlier as total income moderated a tad while total expenditure increased.

The lender’s gross non-performing assets remained elevated at 6.1% at the end of June, although came down from 7.7% three months prior. The ratio was at 11.4% a year ago. Net NPA was at 2.9% as compared with 3.3% three months back.

The asset quality stress, which was a result of lending to overleveraged microfinance borrowers, continued to keep Utkarsh on a sticky wicket. About half of its total loan portfolio is unsecured.

Its capital adequacy ratio fell to 17.4% from 19.6% a year ago.