The Hindu Business Line : UBI mulls converting equity to pref shares

Balance sheet
In 2005-06, the bank recorded a 15.4 per cent increase in deposits
Its CD ratio improved from 46.7 per cent to 54.6 per cent
Net NPA dipped from 2.43 per cent to 1.95 per cent

MR P.K.GUPTA

Kolkata , May 5

United Bank of India is eyeing conversion of a part of its equity into preference shares in line with its capital restructuring process, which has started with a netting off of accumulated loss of Rs 278 crore.

UBI, which is set to pay a dividend to the Government after a gap of 14 years, will come closer to listing its stock on the exchanges once the capital recast is completed.

The Chairman-cum-Managing Director, Mr P.K. Gupta, said the bank now has a clean balance sheet, marked by improving asset quality and cash recovery. Credit growth is expected to be significant in the coming days, while efforts to mobilise deposits will be stepped up.

The dividend payment — 3 per cent on total (non-restructured) equity base of Rs 1,532 crore — will see an outgo of Rs 45.97 crore. "This comes after a hiatus of 14 years. The last dividend payout was Rs 0.5 crore, which was paid in 1991-92," Mr Gupta told newspersons here.

The bank, which has seen a 34.8 per cent growth in credit during 2005-06, has recorded a 15.4 per cent increase in deposits.

Profitability under pressure

The bank has reported a drop in net profit for the year ended March 31, 2006 on account of higher depreciation on investments, higher wage bill and a decline in profit from treasury operations, Mr Gupta said.

The post-tax profit works out to Rs 204 crore in 2005-06 against Rs 300 crore or so during the last fiscal. Operating profit has declined from Rs 689 crore to Rs 643 crore over this period.

The impact of a higher wage bill (Rs 130 crore) will not be evident this fiscal, it is pointed out. UBI's total business, incidentally, has crossed the Rs 45,000-crore mark as on March 2006.

Its net investment was at Rs 14,130 crore.