The Hindu Business Line : United Bank seeks to adjust losses against capital

Mr P.K. Gupta (left), CMD, United Bank of India, and Ms Sunanda Lahiri, Executive Director, at a press conference in Kolkata on Friday. - - A. Roy Chowdhury

Kolkata , Oct 28

UNITED Bank of India (UBI) has mooted a proposal to adjust its losses against capital. It has requested the Reserve Bank of India to allow it to go ahead with the recast.

UBI, which recorded accumulated losses of Rs 278 crore as on March 2005, suggested that the proposal would in due course help it to come out with an initial public offer.

The bank's board, said Mr P.K. Gupta, CMD, had already cleared the plan.

Even after adjustment, UBI will be left with a "large" capital, he mentioned, adding that the ideal size of capital would be determined by the growth plans and the market scenario.

Incidentally, UBI has reported a capital adequacy of 16.58 per cent as in September 2005.

Profitability hit: On Friday, UBI announced that its profitability has been affected due to factors such as increase in wage bill (following a recent salary revision) and additional provisioning requirement for NPAs. In addition, depreciation on investments remained a critical issue.

Net profit has increased marginally to Rs 104 crore during April-September 2005 as against Rs 103 crore during April-September 2004. Total business has increased by 17 per cent from Rs 33,330 crore (as on September 30, 2004) to Rs 38,995 crore as at the end of the quarter endedSeptember, 2005. Deposits grew by 9.18 per cent to Rs 26,003 crore (Rs 23,816 crore).

Net advances increased by Rs 3,475 crore to Rs 12,992 crore, a 37-per cent increase. Cost of deposits declined to 4.93 per cent during the half-year compared to 5.19 per cent during the corresponding period last year.

UBI has reported a dip in the investment portfolio from Rs 14,115 crores as on September 30, 2004 to Rs 13,936 crores as at the end of the last quarter.

The bank has recorded fresh NPAs in various sectors, including tea, which generated NPAs of Rs 21 crores in recent times. Increasing interest income, managing NPAs and augmenting advances will remain some of the bank's priorities, Mr Gupta mentioned. Credit rating agency ICRA has been engaged to develop a credit risk rating model.

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