Utkarsh Small Finance Bank Limited · NSE:UTKARSHBNK
Utkarsh Small Finance Bank — Q2 FY25 Earnings Presentation
50 slides from Utkarsh Small Finance Bank's earnings presentation, Nov 9, 2024
Slide 1: Intimation of Investor Presentation to Stock Exchanges
November 9, 2024 The BSE Limited National Stock Exchange of India Limited 543942, 958095, 959644, 968226, 975790 UTKARSHBNK Dear Sir/Madam, Sub: Investor Presentation Further to our letter dated November 06, 2024 intimating about Earnings Conference Call, please find attached Investor presentation w
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Slide 3: Key Highlights Q2 & H1, FY25
Key Highlights Q2 & H1, FY25 Gross loan portfolio growth 28% YoY, deposits growth 40% YoY Consistent increase in share of secured loan portfolio - 38% as on September 30, 2024; optimizing disbursement yields across secured asset classes — yield for MSME & HL improved by 50-80 bps over same quarter l
Slide 4: Key Metrics Snapshot
₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ Gross NPAs Banking Outlets Gross Loan Profit After Tax Profit After Tax Deposits Capital + Reserves Portfolio ₹ ₹ ₹ ₹ Pre-provisioning Pre-provisioning Gross Loan Operating Profit Operating Profit Deposits / RTD Net NPA States & UTs Portfolio Growth Growth YoY YoY CRAR Cost to In
Slide 5: Journey and Franchise
©) Journey and Franchise Portfolio Build Up Deposits Build Up Financial Performance Technology, ESG & CSR
Slide 6: Journey and Franchise
Journey and Franchise Committed journey of ~15 years from Microfinance to Small Finance Bank to Listed Company Significant presence in rural & semi urban locations and under penetrated States of the Country Differentiated branch network to ensure relevant product offerings for customers & ensuring c
Slide 7: Utkarsh Journey
Utkarsh Journey In Jul-23 Bank launched IPO to raise equity capital of 2500 crore; IPO oversubscribed >100 X; Higher ever annual PAT of 498 crore in FY24 Bank's Capital + Reserves crossed %3,000 crore : Launched digital on- Conversion of boarding microfinance Raised couity cvoitat of Bank commenced
Slide 8: Business Loans, Deposits and Other Products
Joint Liability Business MSME Loans Housing Group Loans Loans (Retail Assets) Loans 1 Wholesale Other Retail CV/CE Lending ODFD Loans & BC Loans (FI & BBG) Channel Current Savings Term and Recurring Account Account Deposit Accounts Insurance Mutual Locker Internet Mobile Products Funds Facilities ba
Slide 9: Branch and Outlet Network
232 213 19 9 3 4 206 158 48 18 14 25 89 78 11 3 1 3 87 80 7 2 2 - 77 39 38 19 12 - 32 4 28 3 1 1 244 95 149 32 24 13 8
Slide 10: Key Strategies
Consistently increase share of secured loans in portfolio mix Leverage wide base of existing customers in the unserved and underserved segments Extend products offering from JLG loans to individual loans, affordable housing and other new products Focus on offering working capital and term lo
Slide 11: Portfolio Build-up
Portfolio Build-up Loan portfolio grew 28% YoY Rural & semi urban franchise, deep rooted understanding of our core geographies, proven track record - key strength of our micro-banking lending Increasing share of secured lending with build-up of MSME, Housing & CV / CE loan book 10
Slide 12: Gross Loan Portfolio Mix
₹ Joint Liability Group Loans (JLG)* Micro-Banking Business Loans (MBBL) Other Retail Loans** ₹ 11
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Slide 14: Micro-Banking Loans
₹ ₹ ₹ ₹ ₹ ₹ ₹ o Rural and semi-urban presence – 86% MB branches in rural and semi urban locations o Loan book declined in Q2, FY25 as Bank slowed down on disbursements, focus shifted towards collections o Opened saving accounts for ~61% of micro-banking customers, build customer connect stronger ₹ 1
Slide 15: Joint Liability Group Loans
₹ o Slowed down on JLG disbursements in Q2, FY25 considering weakness in collection efficiency and asset quality / borrower level over-leveraging concerns; implemented MFIN recommendations from August 1, 2024 o Large franchise with customer base of >30 lakhs o Digital collections through customized
Slide 16: Micro-Banking Business Loans
₹ o Micro-Banking Business Loan (MBBL) scaling up on track with YoY loan book growth 60% o Significant potential to grow considering large JLG client base of the Bank o Collection largely digital - through direct account debit 15
Slide 17: Other Retail Lending
| Other Retail Lending |
Slide 18: Secured Business Loans (LAP)
₹ Secured Unsecured Micro LAP / Business Loans Business Loan Overdraft (LAP) o o 600 12.0% 500 10.0% 400 8.0% o 300 6.0% 200 o ₹ 4.0% 2.0% 100 o 0.0% - 17
Slide 19: MSME / Housing Loans
₹ o o o ₹ 110 10.0% 90 o 8.0% 70 ₹ 6.0% 50 o 30 4.0% 10 2.0% (10) 0.0% 18
Slide 20: CV / CE Loans
₹ CV (New) CE (New) CV & CE (Used) •88% of total •8% of total •4% of total portfolio portfolio portfolio o o 180 12.0% 160 o 140 10.0% 120 o ₹ 8.0% 100 80 6.0% o 60 4.0% 40 2.0% 20 - 0.0% 19
Slide 21: Geographical Split of Other Retail Lending
Geographical Split of Other Retail Lending au amounts ine crores Ee 4.593. | | 5.104 | Ea [6.162 | Geographical Split of Other Retail Lending Portfolio Disbursements Presence across 24 States / UTs WEST JHARKHAND BENGAL Other States 3% 3% 13% (1,070) 1 TELANGANA (7) (<a) ms | HARYANA UTTAR 9% PRADES
Slide 22: Wholesale Lending
Wholesale Lending Portfolio Break up (Mar-20) Portfolio Break up (Sep-24) ) All Amounts in % Crores SL } Sep-24 } Sep-23 } Jun-24 Portfolio O/s %2,050 1,672 1,872 Share in Gross Loan Portfolio 11% 11% 10% Business Banking Group 0% Started Business Banking in FY21 Business Banking Group 34% Rating Wi
Slide 23: Deposits Build-up
Deposits Build-up \ \ \ \ h) Deposits grew by 40% YoY; Retail Term Deposits grew 48% YoY zs) Expanded General Banking Franchise significantly ©) Targeting top-100 deposits centres of the country G Focus on building retail franchise 22
Slide 24: Deposit Mix and Branch Vintage
₹ 102% 22,000 100% 98% 96% 94% 20,000 92% 90% 88% 86% 84% 18,000 82% 80% 78% 76% 74% 16,000 72% 70% 68% 66% 14,000 64% 62% 60% 58% 56% 12,000 54% 52% 50% 48% 46% 10,000 44% 42% 40% 38% 8,000 36% 34% 32% 30% 28% 6,000 26% 24% 22% 20% 4,000 18% 16% 14% 12% 10% 2,000 8% 6% 4% 2% 0% - ~48% of the ₹ ₹ br
Slide 25: Long Term Credit Rating
₹ Long Term Credit Rating Term Deposits CASA CARE ICRA Rating for certificate of deposit programme ICRA *Excluding Deposits through Fintech & Bank Website 24
Slide 26: NPA Movement
₹ 92 49 91 104 79 Additions during the period 98 136 93 180 356 262 301 264 264 369 Reductions during the period 120 134 149 169 190 Up-gradations & Recoveries 34 26 49 18 33 2 2 2 1 1 Write-offs 92 49 91 104 79 68 72 78 80 85 *NPA Movement based on quarter-end NPAs 25
Slide 27: Collection Efficiency and Asset Quality
o Collection efficiency & asset quality weakened on account higher leverage level at borrower level and weakened discipline level for centre meetings continuing from covid times o Strengthening collection efforts and dedicated teams for collections / supervisors at field level to improve collection
Slide 28: Financial Performance
Financial Performance g &(@ @ Stable & consistent financial performance Focus on cost efficiency resulting healthy cost income ratio Healthy Operating Profitability Building floating provision to ensure resiliency 2 7
Slide 29: Operating Profit & PAT - Quarterly Trend
Operating Profit & PAT - Quarterly Trend (& in crores) (@ in crores) Enduring Profitability Metrics | i i - i YTD Operating Profit & PAT “© [239 so) | 160| 114) 116] ] ! 51) Q2' FY24 Q3' FY24 Q4' FY24 Qt FY25 Q2' FY25 | H1FY24 HTFY25 @ Operating Profit (PPoP) | PAT 18.8% / 7.7% / 9.1% H1 FY24 f1s8%|
Slide 30: Credit Cost and Cost Ratios
Credit cos at 3.9% for Q2, FY25, excluding floating provision created of %21 crore . Q2'FY24 = Q3'FY24 Q4'FY24 Q1'FY25 Q2'FY25 Credit Cost : : = Cost to Income Ratio = =Non-Interest income/Interest income mQ2'FY24 Q3'FY24 mQ4'‘FY24 BQT'FY25 mQ2'FY25 . , yO HIFY24 | i utry2s | \_H1FY24 Q4'FY24 ai'ry2
Slide 31: Cross-Cycle Return on Equity (RoE)
Cross-Cycle Return on Equity (RoE) Additionally, built floating provision cushion during this period; 190 Average: 14.9% =~ crore as on Sep-24 A Co ~ FY23 FY24 FY20 FY21 FY22 H1'FY25
Slide 32: Break-up of other income
Break-up of other income Q2'FY24 Q1'FY25 Q2'FY25 Loan Processing Fee PSLC Income # Recovery from written off accounts General Banking & Other Income
Slide 33: Guidance for FY25
Deposits Growth (%) Deposits growth to be higher than Deposits growth to be higher than credit growth, reduction in CD ratio credit growth, reduction in CD ratio Improvement in share of CASA + Improvement in share of CASA + RTD deposits RTD deposits Loan Book Growth (%) ~30% 18 - 20% Share of secure
Slide 34: Capital Adequacy
₹ Risk Weighted Assets 10,906 13,358 Total Capital 2,707 3,096 Tier-I Capital 2,513 2,724 Tier-II Capital 194 373 CRAR 24.82% 23.18% Tier-I CRAR 23.04% 20.39% Tier-II CRAR 1.78% 2.79% 33
Slide 35: Profit & Loss Statement
₹ Total Interest Earned 1,953 1,477 987 756 966 Less : Interest Expense 822 613 429 315 393 Add : Other Income (Processing Fee on loans+ Transaction and other fee 207 197 103 105 105 income + PSLC income + Write off Collections) Personnel Cost 416 347 211 177 205 Other Operating Expenses 335 255 174
Slide 36: Balance Sheet
₹ Audited Limited Review Capital and Reserves 3,125 2,687 3,119 Deposits 19,496 13,965 18,163 Borrowings 1,998 1,902 2,113 Other Liabilities and Provisions 1,687 1,103 1,497 Cash and balances with RBI 2,545 1,305 1,424 Balances with banks and money 700 332 2,067 at call and short notice Investments
Slide 37: Major Shareholders
Utkarsh CoreInvest Limited Mirae Asset (Mutual Funds) Olympus ACF Pte. Ltd. Aditya Birla Sun Life Trustee Private Limited Bharti AXA Life Insurance Company Ltd. Aavishkaar Bharat Fund responsAbility Participations Mauritius Massachusetts Institute of Technology Basic Retirement Plan Trust Triodos Cu
Slide 38: Board of Directors
• Certified Associate of the Indian Institute of Bankers • Previous associations with SBI as Managing Director & BoB • Previous associations include SIDBI as DMD, SIDBI Venture as senior advisor Capital Limited as CEO, MUDRA, Receivables Exchange of India • Other key associations - Non-Executive Cha
Slide 39: Management Team
Managing Director & Chief Executive Officer Executive Director • Over 25 years of experience in the banking and financial services sector • Previously worked with ICICI Bank as the Head of and in particular the microfinance industry Operations, Federal Bank • Experienced in branch banking, P&L mgmt.
Slide 40: Technology, ESG & CSR
===> SG g& Technology Setup to support Physical Infrastructure and 'Y Digital Requirement ~ ( E) ) Integrating ESG Sensitivities into our operations & decision- making &y Contributing to the well-being of the society 39
Slide 41: Technology Infrastructure and Digital Capabilities
Supporting extensive branch network of ISO 27001 Certification for IT operation 967 branches Tab enabled feet-on-street for acquisition Micro ATM for Cash Withdrawal in Remote and collections locations Extensive Mobile and internet Banking for Robotic Process Automation for internal customer service
Slide 42: 360-Degree Transformation - Bank Future Growth Ready
360-DegreeTransformation — Bank Future Growth Ready Business and Diversified pres a Product Enhanced i revenue Faster TAT streams “ Stes) Employees & Improved Shareholders ui Reporting Compliance Efficient . Tech : &S Partnerships Enablement A el Improved New business reli opportunities Revenue Grow
Slide 43: Technology Transformation Journey
3 Yrs. Transformation Journey • Core Banking Solutions (CBS) • Loan Origination System (LOS) • Adapt best in class • Data Lake and Data Analytics • Digital plus Physical co-existence • Cloud Computing • Improve Reliability • Robotic Process Automation (RPA) • Strengthen Scalability • Lead Management
Slide 44: Environment, Social & Governance
Environment, Social & Governance Practice is aligned with the national E&S laws and regulations and relevant E&S Good International Industry Practices (GIIP). Committed to give due consideration to environmental & social sensitivities in portfolio, integrating these into its business operations and
Slide 45: Awards & Accolades
Awards & Accolades g H Team of the Year Award at | the India Credit Risk Summit & Awards 2024 MARKSMEN DAILY MOST | PREFERRED WORKPLAC AWARD CERTIFICATE | Wow cnearrnisx UTKARSH SIAL FINANCE BANK "mar ms Best Technology Talent at 19* Annual Banking Technology Conference, Expo & Citations H Most Pref
Slide 46: Awards & Accolades (contd.)
Awards & Accolades (conta,) Strategy by India Customer Excellence (CX) Summit & Awards 2023 EMPLOYEE ‘* EXCELLENCE i INDIA | CUSTOMER Jf Employee Excellence 2023 by the Times Group — ET EDGE Team Marksmen Daily -— 2023-24
Slide 47: Utkarsh Welfare Foundation: CSR Initiatives
Utkarsh Welfare Foundation: CSR Initiatives FINANCIAL AWARENESS HEALTH INITIATIVES SKILL & ENTERPRISE VILLAGE DEVELOPMENT OTHER PHILANTHROPIC DEVELOPMENT PROGRAM PROGRAM ACTIVITIES Initiatives Lives Impacted Lives Impacted Lives Impacted Lives Impacted Blood Donation Camps, 12,80,000+ 19,20,000+ 43,
Slide 48: Utkarsh Welfare Foundation: CSR Initiatives (Contd.)
Utkarsh Welfare Foundation: CSR Initiatives (Contd.) rs. fe N P Village Development Blood Donation Camps Program Learning Enhancement Program
Slide 49: Disclaimer
Utkarsh Small Finance Bank Limited (also referred to as ‘Bank’). By attending a meeting where this presentation is made, or by reading this presentation material, you agree to be bound by following limitations: The information in this presentation has been prepared for use in presentations by Bank f
Slide 50: Thank You
THANK YOU. ©) Utkarsh Small Finance Bank
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