Despite the earnings hit, asset quality improved sequentially. Gross non-performing assets declined to 11.05% from 12.42% in the previous quarter, while net NPAs eased to 4.48% from 5.02% quarter-on-quarter, indicating better collection efficiency and stabilisation in the loan book.
The bank’s cost-to-income ratio rose sharply to 110.3%, compared with 68.4% earlier, while return on assets and return on equity remained negative at -5.4% and -55.9%, respectively, underscoring continued stress on profitability.During the quarter, Utkarsh SFB slowed down disbursements, leading to a decline in the overall loan book as management shifted focus towards collections and portfolio clean-up. The bank also strengthened customer engagement, opening savings accounts for over 75% of its micro-banking customers.
The joint liability group (JLG) segment witnessed a slowdown due to market disruptions, while non-JLG loan portfolios grew 27.5% year-on-year, driven by increased focus on secured products such as MSME loans, housing finance and gold loans. The Micro-Banking Business Loan (MBBL) segment continued to scale up, recording 80% year-on-year loan book growth, supported by largely digital collections through direct account debit.
Also Read: City Union Bank Q3 Results: Profit rises 16%, asset quality improves
Utkarsh SFB also raised ₹950 crore through a rights issue in November 2025, strengthening its capital base. Deposits grew 5% year-on-year, while retail term deposits rose 24%, reflecting improved liability franchise traction. As of December 2025, the bank served 5.14 million customers, with yields on advances at 14.7%.
