Shares of Utkarsh Small Finance Bank (SFB) gained 2% to ₹35.22 in early trading on Monday, December 30, 2024, following the company’s announcement to sell a portfolio of non-performing assets (NPAs) and written-off loans to an Asset Reconstruction Company (ARC).
Key Details of the Decision:
- Portfolio Details:
- The sale includes unsecured stressed microfinance institution (MFI) loans with an aggregate outstanding principal of approximately ₹355 crore as of September 30, 2024.
- The reserve price for the sale is set at ₹52 crore, which will include a mix of cash and security receipts.
- Board Approval:
- The bank’s Management Committee approved the proposal during a meeting held on December 27, 2024.
Financial Performance Highlights:
- Q2 FY25 Results:
- Standalone net profit declined 55% YoY to ₹51.39 crore.
- Total income grew 26.47% YoY to ₹1,089.54 crore.
- Profit before tax stood at ₹68.07 crore, a drop of 55.92% YoY.
- Asset Quality:
- Gross NPAs rose to ₹718.74 crore (up from ₹403.53 crore a year ago).
- Net NPAs increased to ₹159.97 crore (up from ₹21.64 crore a year ago).
- Gross NPA ratio surged to 3.88% in Q2 FY25, compared to 2.81% in Q2 FY24.
Market Reaction:
The stock had closed 1.17% lower on December 27, but the announcement of the ARC transaction appears to have instilled some confidence in investors, reflecting in today’s price uptick.
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