UTKARSH SMALL FINANCE BANK 2023-24 Annual Report Analysis

Tue, 2 Jul

UTKARSH SMALL FINANCE BANK has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the bank during the year 2023-24.

UTKARSH SMALL FINANCE BANK Income Statement Analysis

• Interest income during the year rose 26.9% on a year-on-year (YoY) basis.
• Interest expenses were up by 32.4% YoY during the same period.
• Operating expenses increased by 30.2% YoY during the year.
• The bank's net interest income (NII) increased by 23.3% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 9.4% in FY24 as against 9.6% in FY23.
• Other income increased by 33.8% YoY during the year.
• Net profit for the year increased by 23.0% YoY.
• Net profit margins during the year declined to 15.7% in FY24 from 16.1% in FY23.

UTKARSH SMALL FINANCE BANK Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	25,050	31,784	26.9%
Other Income	Rs m	2,993	4,004	33.8%
Interest Expense	Rs m	9,759	12,926	32.4%
Net Interest Income	Rs m	15,290	18,858	23.3%
Operating Expense	Rs m	9,900	12,889	30.2%
Pre-provision Operating Profit	Rs m	8,383	9,973	19.0%
Provisions & Contingencies	Rs m	4,338	4,996	15.2%
Profit before tax	Rs m	5,358	6,594	23.1%
Tax	Rs m	1,313	1,618	23.2%
Profit after tax	Rs m	4,045	4,976	23.0%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	9.6	9.4
Net profit margin	%	16.1	15.7

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UTKARSH SMALL FINANCE BANK Balance Sheet Analysis

• The bank's deposits during FY24 stood at Rs 174.7 bn as compared to Rs 137.1 bn in FY23, thereby witnessing an increase of 27.4%.
• Advances for the year stood at Rs 163.6 bn as compared to Rs 130.7 bn during FY23, a rise of 25.2%.
• Cost of deposits for UTKARSH SMALL FINANCE BANK rose 12.1% and stood at 6.4%, while yield on advances rose to 17.6%.
• The lender's investments rose to Rs 36.8 bn during the year from Rs 28.6 bn in FY23.
• Borrowing stood at Rs 20.0 bn, a fall of 15.1% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 239.0 bn as against Rs 191.2 bn during FY23, thereby witnessing a rise of 25.0%.

UTKARSH SMALL FINANCE BANK Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	19,823	29,516	48.9%
Advances	Rs m	130,688	163,648	25.2%
Deposits	Rs m	137,101	174,726	27.4%
Yield on advances	%	17.4	17.6
Cost of Deposits	%	5.7	6.4
Investments	Rs m	28,594	36,795	28.7%
Borrowings	Rs m	23,495	19,951	-15.1%
Total Assets	Rs m	191,173	239,027	25.0%

Current Valuations for UTKARSH SMALL FINANCE BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 4.5, an improvement from the EPS of Rs 4.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 51.2, stands at 11.7 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 1.9 times, while the price to income ratio stands at 1.8 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	28.0	28.9
Earnings per share (Unadj.)	Rs	4.5	4.5
Diluted earnings per share	Rs	3.7	4.5
Avg P/E ratio	Rs	0.0	11.7
Avg P/ABV ratio	Rs	0.1	1.9
Avg Market Cap	Rs	0	57,985
Dividends per share (Unadj.)	Rs	0.00	0.50

Ratio Analysis for UTKARSH SMALL FINANCE BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio deteriorated and stood at 93.7x during FY24, from 95.3x during FY23. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio decreased and stood at 6.60x during FY24, from 8.10x during FY23. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): UTKARSH SMALL FINANCE BANK's capital adequacy ratio (CAR) was at 22.6% as on 31 March 2024 as compared to 20.6% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank deteriorated and stood at 16.9% during FY24, from 20.4% during FY23. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank deteriorated and stood at 2.08% during FY24, from 2.12% during FY23. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank improved and stood at 17.84% during FY24, from 17.13% during FY23. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. UTKARSH SMALL FINANCE BANK's gross NPA ratio stood at 2.5% as of 31 March 2024 compared to 3.2% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of UTKARSH SMALL FINANCE BANK was 0.0% in financial year 2024. This compared with 0.4% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	95.3	93.7
Debt to Equity Ratio	x	8.1	6.6
Loans / Deposits	x	0.2	0.1
Capital Adequacy Ratio	%	20.6	22.6
Return on Equity	%	20.4	16.9
Return on Assets	%	2.1	2.1
Return on Capital Employed	%	17.1	17.8
% of Gross NPAs	%	3.2	2.5
% of Net NPAs	%	0.4	0.0
Yield on Advances	x	17.4	17.6
Yield on Investments	x	5.2	5.7

To see how UTKARSH SMALL FINANCE BANK has performed over the last 5 years, please visit here.

UTKARSH SMALL FINANCE BANK Share Price Performance

Over the last one year, UTKARSH SMALL FINANCE BANK share price has moved up from Rs 0.0 to Rs 51.2, registering a gain of Rs 51.2 or around 0.0%.

Meanwhile, the S&P BSE BANKEX is trading at 59,301.3 (down 0.9%). Over the last one year it has moved up from 50,500.6 to 59,301.3, registering a gain of 8,800.7 points (up 17.4%).

Overall, the S&P BSE SENSEX is up 24.4% over the year.

(To know more, you can check out historical annual results for UTKARSH SMALL FINANCE BANK here and quarterly results for UTKARSH SMALL FINANCE BANK here)