Utkarsh CoreInvest Limited
Company Background:
The company is the holding company of Utkarsh Small Finance Bank. Utkarsh Coreinvest started its operations in 2009 as a micro finance company. This micro finance business gradually expanded and got a license from RBI to establish a small finance bank in 2016.
Utkarsh presently has operations in 139 Districts across 11 States of Bihar, Chhattisgarh, Delhi-NCR, Haryana, Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Uttar Pradesh, Uttarakhand and West Bengal with 61 General Banking Outlets and 375 Micro Banking Outlets. These are served by over 6,300 employees. The Microfinance outreach through the financial inclusion initiative of the Bank has covered over 20 lakh Active Women Client base in 120 districts of 10 states across India.
Utkarsh Business & Financial Performance:
Utkarsh achieved an important milestone of 20 lakh customer base in Microfinance business and sourced more than 2 lakh Liability Accounts. In FY19, Utkarsh managed to raise deposits by 72% from Rs. 2,194 crore (FY18) to Rs. 3,791 crore (FY19). The Current Account-Savings Account (CASA) Ratio improved to 10% (FY19) from 3.9% (FY18). Retail Deposits (CASA+RTD) ratio increased to 30.77% (FY19) from 12.89% (FY18). The gross advances grew by 48% from Rs. 3,208 crore (FY18) to Rs. 4,740 crore (FY19).
Below is a quick snapshot of important performance metrics: (Amounts in Rs. crores)
| Particulars | 31-Mar-19 | 31-Mar-18 | Change in % |
| Deposits | 3,791.40 | 2,193.90 | 72.80% |
| Investments | 862.2 | 661.3 | 30.40% |
| Advances (Net) | 4665.7 | 3101.7 | 50.42% |
| Net Worth | 772.8 | 411.9 | 87.60% |
| Net Interest Income | 497.4 | 267.4 | 85.40% |
| Other Income | 59.8 | 43.7 | 34.80% |
| Net Total Income | 557.2 | 311.1 | 76.80% |
| Operating Expenses | 326.7 | 235.5 | 42.70% |
| Provisions and Contingencies | 136.6 | 138.6 | -58.80% |
| Profit Before Tax | 148.8 | -94.8 | 257.00% |
| Tax | 54.9 | -31.8 | -272.30% |
| Net Profit | 93.9 | -63 | 249.20% |
| Gross NPA Ratio | 1.39% | 1.85% | -24.90% |
| Net NPA Ratio | 0.12% | 1.09% | -89.00% |
| Capital Adequacy Ratio | 24.14 | 17.40% | 37.40% |
| Business Per Employee | 1.4 | 0.77 | 81.80% |
| Business Per Branch | 19.6 | 8.86 | 121.20% |
The Gross NPA and Net NPA were 1.39% and 0.12% respectively as on March 31, 2019. The Bank’s Capital to Risk Assets Ratio (CRAR) was 24.10%, as against the stipulated 15%. The Cost of Funds for the Bank has declined from 9.99% in prior financial year to 9.30% in financial year 2018-19. An aggregate amount of Rs. 12.38 crore was collected from written-off clients which made a positive impact on the overall collections. In the second half of FY2018-19, the Bank witnessed collection efficiency of almost 100%.
These improvements translated into stronger financial performance of the company. Utkarsh’s Net Interest Income (NII) of Rs. 497.4 crore, a growth of 86% over FY18 and Operating Profit nearly doubled Rs. 219 crore. Utkarsh achieved Rs. 148.8 crore as Profit Before Tax (PBT) and Rs. 93.9 crore of Profit After Tax, compared to a loss in FY18.
| Particulars | 2018 | 2019 | Growth |
| Interest Earned | 5,181,735 | 8,792,381 | 69.7% |
| Other Income | 436,897 | 598,527 | 37.0% |
| Total | 5,618,632 | 9,390,908 | 67.1% |
| Interest Expended | 2,507,305 | 3,818,738 | 52.3% |
| Operating Expenses | 2,355,532 | 3,266,899 | 38.7% |
| Provisions and Contingencies | 1,385,960 | 1,366,390 | -1.4% |
| Net Profit / (Loss) for the year | (630,165) | 938,881 | |
| Balance in Profit and Loss (Prev Yr) | 36,261 | (593,904) | |
| Total | (593,904) | 344,977 | |
| Diluted EPS | -1.73 | 1.37 |
To see more detailed financial performance alongwith notes, please click here.
Future prospects:
According to MFIN, as of March 31, 2019 the gross loan portfolio of microfinance industry is estimated to have shown an annual growth of 38% to Rs. 1,87,386 crore. The total number of microfinance accounts have grown by 21.9% to 9.33 crore accounts. As of March 31, 2019 NBFCMFIs have the largest market share Rs. 68,868 crore (36.8%), followed by Banks Rs. 61,046 crore (32.6%), Small Finance Banks Rs. 34,679 crore (18.5%) and others accounting for Rs. 22,674 crore (12.1%) of the gross microfinance portfolio. Thus the market is growing and NBFCs like Utkarsh who are into micro finance and now also small finance banks, have a dual advantage in catering this segment.
Utkarsh plans to strategically further grow into other locations and newer states which will boost business and profitability. The Bank is planning to start Micro Banking operations in Odisha state to expand its footprint further in the eastern part of India. Utkarsh has ventured into newer geographies through its Business Correspondent model to serve clients’ needs. These geographies are where Utkarsh is not present.
Utkarsh plans to continue to focus on building CASA liabilities and growing its business across India alongwith an eye on listing its small finance business which will help provide capital for further growth.
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