UCO Bank, which recently came out of the Prompt Corrective Action (PCA) measure of Reserve Bank of India, registered over five-fold growth in net profit at ₹205 crore for the second quarter ended September 30, 2021, as compared with ₹30 crore same period last year.
According to Atul Kumar Goel, MD & CEO, UCO Bank, the growth in net profit was mainly on the back of a rise in net interest income and lower provisions.
Net interest income grew by 15 per cent to ₹1,598 crore during the quarter under review, as against ₹1,394 crore same period last year. Other income increased by 31 per cent to ₹936 crore (₹713 crore).
Provisions during the quarter came down by nearly 22 per cent to ₹1,019 crore (₹1,301 crore).
The bank came out of PCA in September this year following the compliance of norms by maintaining minimum regulatory capital, net NPA, and leverage ratio on an ongoing basis.
The operating profit increased by 24 per cent at ₹1,334 crore (₹1,076 crore).
Gross non-performing asset (NPA) as a percentage of total advances declined to 8.98 per cent (11.62 per cent). This is despite the fact that the bank recognised its exposure of close to ₹1,440 crore in three big accounts as NPA during the quarter under review. This includes around ₹1,000 crore in Srei Infrastructure and Srei Equipment Finance; around ₹190 crore in Delhi Metro and another ₹250 crore in a road project.
Net NPA came down to 3.37 per cent (3.63 per cent).
Provision coverage ratio (PCR) increased to 90.02 per cent as on September 30, 2021 from 89.82 per cent same period last year and from 88.53 per cent as on June 30, 2021.
RBI resolution framework
UCO Bank has restructured 2,067 accounts amounting to ₹1,356 crore under Resolution Framework 1.0 and another 51,512 accounts amounting to ₹2,705 crore under Resolution Framework 2.0 of RBI.
The bank’s domestic net interest margin improved marginally to 2.9 per cent (2.88 per cent) during the quarter under review. It expects NIM to further improve to around three per cent by the end of this fiscal.
UCO Bank, which grew its advances by around six per cent during the quarter under review, expects close to 10 per cent growth in loan book this fiscal aided by a steady pick up in demand.
“We are out of the Covid impact and there is good demand in retail, agriculture and corporate sectors. We are expecting 10 per cent growth in advances this fiscal,” Goel said.
The bank has also tied up with an NBFC in housing sector for co-lending model.
The bank’s scrip closed at ₹14.38, down by 2.04 per cent on the BSE on Thursday.