The Hindu Business Line : UCO Bank capital recast plan gets nod

Better show: Mr S.K. Goel, Chairman and Managing, UCO Bank, flanked by the Executive Directors Mr B.N. Mittal (right) and Mr V.K. Dhingra, at a press conference in Kolkata on Monday.

Our Bureau

Kolkata, May 5 UCO Bank has received Government approval for capital restructuring, said Mr S.K. Goel, Chairman and Managing Director, UCO Bank, here on Monday.

The essence of restructuring, Mr Goel explained to newspersons, would be to issue non-cumulative preference shares of Rs 325 crore by June and conversion of Rs 300 crore of Government equity into preference shares. “With conversion, the size of our equity capital will get reduced to Rs 500 crore, comprising Rs 300 crore of Government holdings and Rs 200 crore of public holdings,” Mr Goel said. “We’re awaiting Cabinet approval for the conversion,” he added.

There was also a proposal for follow-on public issue by the third quarter when the capital market was expected to turn better. “The present restructuring will leave a headroom of Rs 100 crore but with premium, to be decided in due course, it should be possible to raise up to Rs 600 crore, depending on the market condition,” he said.

The preference issue of shares and the conversion of government’s equity would bring down the Government’s stake in the bank to 59 per cent from 76 per cent. The follow-on public issue will further bring down the Government holding to 54 per cent, said Mr Goel.

The capital adequacy ratio of the bank stands at 10.09 per cent as on March 31, 2008.

Backed by a recovery of Rs 102 crore from written-off accounts and a good yield on advances, UCO Bank has registered a 30 per cent growth in net profit at Rs 412 crore for the financial year ended March 31, 2008, against Rs 316 crore during the same period of the last fiscal.

The bank recovered a sum of Rs 748 crore (Rs 480 crore) during the year under consideration. “We are hopeful of recovering another Rs 150 crore from our written-off accounts in 2008-09,” said Mr Goel.

Deposits grew by 23.2 per cent at Rs 79,909 crore (Rs 64,860 crore) while advances grew by 17.18 per cent at Rs 55,627 crore (Rs 47,471 crore). The bank targets deposit growth of 22 per cent and advances growth of 20 per cent in 2008-09.

The net interest income (NII) decreased by 6.5 per cent at Rs 1,419 crore (Rs 1,518 crore). “Some of our earlier loans were given at comparatively lower rates based on the market and interest rate situation.

Deposits & advances

The cost of deposits, however, moved up but the yield on advances remained unchanged, putting pressure on our NII,” said Mr Goel. The net interest margin has also declined at 1.87 per cent (2 per cent).

The net non-performing assets declined to 1.98 per cent (2.14 per cent). The bank has made a mark-to-market provision of Rs 130 crore following depreciation in certain securities. The net profit of overseas operation has also decreased by Rs 16 crore to stand at Rs 57 crore (Rs 73 crore).

The bank plans to launch a debt-swapping scheme called ‘Uco Kishan Wrin Mukti Yojna’ to enable farmers liquidate debts from moneylenders.

PTI reports: UCO Bank posted a net profit of Rs 86 crore for the fourth quarter ended March 31.

The figure for the same period a year earlier stood at Rs 30.95 crore. The bank’s board of directors has recommended a dividend of Re 1 per equity share of Rs 10 each for 2007-08.

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