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Informist, Saturday, Jan. 17, 2026

 

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--UCO Bank: May seek extension from SEBI, govt for minimum shrholding deadline
--UCO Bank: Will be difficult to bring down govt shareholding to 75% by Aug
--CONTEXT: Comments from UCO Bank mgmt in media call after Q3 earnings 
--UCO Bank: Negligible impact of new labour laws on employee cost 
--UCO Bank: Overall NIM for FY26 to be better than 2.8-2.9% initial guidance 
--UCO Bank: Confident of surpassing 12-14% loan growth guidance in Q4 
--UCO Bank: Not planning QIP, OFS this month; may do Feb, Mar 
--UCO Bank: Challenge is to bring down govt shrholding, not raise capital
--UCO Bank: Waiting for opportune time for QIP, OFS 
--UCO Bank: Around INR 100 bln sanctioned loans not disbursed due to pricing 
--UCO Bank: We will do only profitable business, not only for top line 
--UCO Bank: Cost of resources taken from mkt slightly high 
--UCO Bank: Around INR 40 bln-INR 50 bln corp loans in pipeline 
--UCO Bank: Challenge in mobilising savings, current deposits continues 
--UCO Bank: Sluggish growth in corp loans due to cutting back low-margin loan 
--UCO Bank: Representative office in Iran not to see any challenges 
--UCO Bank: Expect INR 2 bln/qtr income from recoveries, write-offs 
--UCO Bank: No visibility of any major stress in any sectors in coming qtrs 
--UCO Bank: Planning to launch forex travel card, supply chain finance

 

MUMBAI/NEW DELHI – UCO Bank may seek an extension from the government or capital markets regulator Securities and Exchange Board of India to meet the minimum public shareholding norms. The bank would find it difficult to bring the government's shareholding in the public-sector lender down to 75% by the deadline of Aug. 1, Managing Director and Chief Executive Officer Ashwani Kumar said Saturday.

 

The government holds 90.95% of the bank's outstanding shares as of Dec. 31, with the public holding the remainder. SEBI has mandated that all listed companies must have at least 25% of free float held by the public by Aug. 1. UCO Bank has received an approval for a qualified institutional placement of INR 27 billion from the board in June and the government may also exercise an offer for sale of shares to bring down its shareholding, the management said. 

 

"There is no challenge as far as the bank's capitalisation is concerned, but we have a challenge with regard to the government shareholding," Kumar said in a virtual media call after the bank's December quarter earnings. Indian Overseas Bank's management has also said this week that it may seek an extension of the deadline.

 

UCO Bank's capital-to-risk-weighted assets ratio as on Dec. 31 was 17.43% from 17.89% at September-end, but well above regulatory minimums. Kumar said the bank is trying to gauge the best time to approach the market for the qualified institutional placement or offer for sale. It was not planning to raise capital in either mode in January, but may do so in February or March depending on market conditions and the government's nod.

 

The bank would prioritise profitability and protecting its margins rather than just expanding its balance sheet, the managing director said. It has sanctioned but not disbursed loans worth nearly INR 100 billion currently as it has not been able to agree on pricing with customers. Another INR 40 bln to INR 50 billion of corporate loans are in the pipeline and have not been sanctioned due to the lower interest rates sought by borrowers, Kumar said. With its global net interest margin at 3.08% in the December quarter and 3.03% for the nine months ended December, the bank's margin would exceed the initial 2.8-2.9% guidance for 2025-26 (Apr-Mar), he said. 

 

Despite the callback of low-margin loans from borrowers such as state-owned entitities during the quarter, the bank's domestic advances rose over 17% on year to INR 2.15 trillion as of Dec. 31. Retail advances were up over 28% on year at 641.59 billion at the end of December, in stark contrast with the 3.4% on-year growth in corporate loans. The management was confident of exceeding its 12-14% loan growth guidance for the year in the March quarter as well and said it would extend loans to any "bankable" borrowers at the right price, including lower-rated entities. 

 

Even on the deposit front, though challenges remained in raising low-cost deposits and taking resources from the market was slightly more expensive, UCO Bank was happy with the 10% on year growth in savings accounts and 22% on year growth in current accounts as of Dec. 31, he said. The management attributed this to improved customer service and a stronger omni-channel offering, after revamping its mobile application and website.

 

Over half of fixed deposits bookings and account openings are now channeled through the digital mode, the bank's management said. Based on demand from customers, the bank will introduce cash management services, supply chain finance, and a forex credit card offering soon and into FY27. The bank is also adding robotic automation workflows, improving its cybersecurity infrastructure and strengthening the onboarding of customers for current and savings accounts at the back-end, Kumar said. 

 

In addition to strong core operating growth, the bank's earnings may be boosted by around INR 2 billion to INR 2.5 billion per quarter from recoveries. The recovery in written-off accounts was INR 3.26 billion in Oct-Dec. Kumar said there was no visibility on particular stress building up in any sector in the coming quarters.

 

Even on the global front, UCO Bank's representative office in Iran was unaffected by the recent political turmoil, Kumar said, clarifying that the lender was not conducting any banking business in the West Asian nation. The bank was only undertaking permitted cross-border transactions and had received no requests from customers to deal with sanctioned entities. US sanctions on Russian oil companies have driven down crude imports over the last few months from one of India's largest import partners. 

 

The newly-notified labour laws in November will not have a material impact on the bank's employee costs as it only had a marginal amount of contractual workers on its payrolls, with the hit in the December quarter amounting to less than INR 2 million, the management said. The Kolkata-based lender's bottom line for Oct-Dec rose 16% on year and 19% on quarter to INR 7.40 billion, it reported earlier Saturday. On Friday, shares of the bank ended 0.9% higher at INR 29.66 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Aaryan Khanna and Prateem Rohanekar

Edited by Vandana Hingorani

 

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