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Informist, Saturday, Oct. 19, 2024

 

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--UCO Bank Jul-Sept net profit INR 6.03 bln vs INR 4.02 bln year ago 
--UCO Bank Jul-Sept total income INR 70.71 bln vs INR 58.66 bln year ago 
--UCO Bank gross NPA ratio 3.18% as on Sept 30 vs 3.32% qtr ago 
--UCO Bank net NPA ratio 0.73% as on Sept 30 vs 0.78% qtr ago 
--UCO Bank Basel III capital adequacy ratio 16.84% as on Sept 30 
--UCO Bank Jul-Sept provisions INR 4.93 bln vs INR 3.42 bln year ago 
--UCO Bank Jul-Sept NPA provisions INR 6.09 bln vs INR 3.36 bln year ago 
--UCO Bank non-performing loan provision coverage ratio at 95.94% Sept 30 
--UCO Bank Apr-Sept net profit INR 11.54 bln vs INR 6.25 bln year ago 
--UCO Bank Apr-Sept total income INR 139.31 bln vs INR 117.23 bln year ago 
--UCO Bank Jul-Sept net interest income INR 23.01 bln, up 20% on year 
--UCO Bank Jul-Sept net interest margin 3.10% 
--UCO Bank gross advances INR 1.98 tln as on Sept. 30, up 18% on yr 
--UCO Bank total deposits INR 2.76 tln as on Sept 30, up 10.6% on yr 
--UCO Bank provision coverage ratio at 95.92% as on Sept 30 
--UCO Bank credit to deposit ratio stood at 71.77% as on Sept 30 
--UCO Bank current, savings account ratio 38.24% as on Sept 30 
--UCO Bank Jul-Sept credit cost 126 bps vs 85 bps in Apr-Jun 
--UCO Bank Jul-Sept total recoveries, upgrades INR 10.17 bln 
--UCO Bank MD: Introduced in-house model for MSME lending 
--UCO Bank MD: Will begin capital raising via QIP, roadshow to start soon 
--UCO Bank MD: Rate cuts, if any, may impact NIM in early quarters 
--UCO Bank MD:Don't see NIM falling below 2.9% even if rate cuts happen FY25 
--UCO Bank:Don't see delinquencies from unsecured loan book, share too small 
--UCO Bank MD: In touch with MTNL for a possible resolution plan
--UCO Bank MD: Provisioned INR 1.20 bln against MTNL's bad loans 
--UCO Bank MD: Will do QIP worth INR 15-20 bln rupees initially 
--UCO Bank MD: See govt's stake going down by 2-3% post phase I QIP 
--UCO Bank MD: No proposal right now to write off MTNL's bad loans 
 

 

By Priyasmita Dutta

 

NEW DELHI – Strong growth in net interest income, coupled with an increase in net interest margin aided Kolkata-based UCO Bank to post a robust profit for the quarter ended September. In Jul-Sept, the bank's net profit was to the tune of INR 6.03 billion, up 50.1% on year. Sequentially, the net profit was up 9.4%.

 

The net interest income during the quarter was INR 23.01 billion, up 20% on year. Net interest margin, on the other hand, was 3.10% at the end of September, higher than the 2.84% at end of September 2023. 

 

The bank's net interest margin is, in fact, doing better than their guidance of 2.9-3.0% for the year. Ashwani Kumar, managing director and chief executive officer of the public sector bank said on Saturday he is confident that the current level of interest margin will be maintained for 2024-25 (Apr-Mar), and if the Reserve Bank of India cuts interest rate this year, there may be some impact in the initial quarters following the rate cut. 

 

Even then, he does not see the net interest margin going below 2.9%, he told Informist during the post-earnings press conference. The RBI's Monetary Policy Committee left the policy repo rate unchanged at 6.50% for the tenth meeting in a row, but have changed their stance to neutral in the last meeting earlier this month, sparking hope of a first repo rate cut in four-and-a-half years in December. But, Governor Shaktikanta Das' comment on Friday that a rate cut at this stage would be "premature" has stubbed out expectations. 

 

UCO Bank's net interest income was on the back of steady growth in the bank's business. According to data, at the end of September, UCO Bank's gross advances – at INR 1.98 trillion rupees – were 18% higher on year, while deposits were up 10.6% on year to INR 2.76 trillion. As of Sept. 30, the lender's credit-deposit ratio was 71.77%, higher than the 67.25% a year ago. 

 

The divergence in the growth of advances and deposits comes at a time when the RBI, as well as the finance ministry, have said banks need to establish a healthy balance between the growth rate in their credit disbursal with that of their deposit collections. Kumar 

said that the bank was currently not alarmed by the credit-deposit ratio owing to the comfort it draws from its liquidity position. "Our intention is to always improve deposits, we are doing significant work in that direction," he said, addressing the media. 

 

UCO Bank's current account, savings account ratio was 38.28% at the end of September, it said in an investor presentation. Total income of the bank during the September quarter was INR 70.71 billion, up 20.6% on year, and 3.1% sequentially. During Apr-Sept, UCO posted a net profit of INR 11.54 billion, a sharp 84.6% higher from a year ago. Total income during the period was INR 139.31 billion, up 18.8% on year. 

 

The bank's bottom line for Jul-Sept could have been better had it not raised its provisioning against bad loans by 81.4% on year to INR 6.09 billion and 53.6% sequentially. Out of this, the bank has provisioned about INR 1.20 billion for Mahanagar Telephone Nigam Ltd.'s bad loans worth INR 2.40 billion with the bank, Kumar said. Debt-riddled MTNL has a total financial debt of INR 319.96 billion. 

 

"We are in touch with MTNL, the government is also involved, and we are trying to find a resolution to the situation," Kumar said, adding that writing off the entire loan amount was not being considered by the bank. 

Though the bank increased their provisioning in Jul-Sept, with their non-performing assets coming down, it could have been lower.

The non-performing loan provision coverage ratio was at 95.94% as of Sept. 30.

 

The net NPA ratio improved to 0.73% at the end of September, from 0.78% a quarter ago; and the gross NPA ratio improved to 3.18% from 3.32% a quarter ago. Its capital adequacy ratio as per Basel III norms was at 16.84 as of Sept. 30, slightly down from the 16.83% end of June. Total recoveries during the period also aided the bottom line. The lender recovered INR 10.17 billion in Jul-Sept, sharply higher from the INR 6.78 billion recovered in the June quarter and INR 6.56 billion a year ago.  

 

Kumar said that the bank is committed to lending to the priority sector, especially the micro, small and medium enterprises. Kumar said the bank has introduced an in-house model to extend credit to them, as announced in the Budget for 2024-25 (Apr-Mar). To make credit more accessible to MSMEs, Finance Minister Nirmala Sitharaman had announced that new, independent, and in-house mechanisms will be developed by public sector banks to build their in-house capability to assess MSMEs for credit, instead of relying on external assessment.  End

 

Edited by Vandana Hingorani

 

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