Utkarsh Small Finance Bank reports Q2 loss despite non-JLG loan growth

Utkarsh Small Finance Bank reported a net loss of ₹348 crore for Q2 FY26, a substantial decrease compared to a profit of ₹51 crore in Q2 FY25. For H1 FY26, the bank recorded a loss of ₹588 crore, a stark contrast to the profit of ₹189 crore in H1 FY25. This downturn was primarily driven by a 37% year-on-year drop in net interest income to ₹350 crore in Q2 FY26 and a 122% increase in total provisions to ₹462 crore.

Despite the profitability challenges, the bank saw a 30.3% year-on-year growth in its non-JLG loan portfolio, reaching ₹11,041 crore, and a 10.0% increase in total deposits to ₹21,447 crore as of September 30, 2025. Retail term deposits grew by 28.8% year-on-year to ₹12,257 crore. However, the gross loan portfolio declined by 2.3% year-on-year to ₹18,655 crore, influenced by a 28.4% decrease in the JLG loan portfolio.

Asset quality deteriorated, with gross NPAs rising to 12.4% and net NPAs to 5.0% in Q2 FY26, compared to 3.9% and 0.9% respectively in Q2 FY25. The provision coverage ratio (excluding floating provision) stood at 62.7%. The bank's CRAR decreased to 17.2% from 22.4% year-on-year.