Money & Banking

‘UCO Bank yet to come out of RBI’s PCA framework’

Our Bureau. Kolkata | Updated on October 22, 2020 Published on October 22, 2020

A K Goel, Managing Director and CEO, UCO Bank. - Debasish Bhaduri

Posts net profit of ₹30 crore in Q2

Despite complying with all key regulatory parameters for three subsequent quarters, UCO Bank is yet to come out of the Prompt Corrective Action (PCA) measure of the Reserve Bank of India.

The bank has been posting a sequential growth in net profits for the last three quarters, and has also been able to consistently improve its asset quality by bringing down both gross and net non-performing assets (NPA).

PCA is triggered when banks breach certain regulatory requirements such as minimum capital, return on asset, and quantum of non-performing asset.

According to Atul Kumar Goel, MD and CEO, UCO Bank, while the bank has been able to adhere to all the four parameters required to come out of PCA, the regulator (RBI) might want to wait and assess the impact of the pandemic and the moratorium on asset quality in the next one or two quarters.

“We have managed to adhere to all four parameters required to come out of PCA in the March, June and now in the September quarter. The call has to be now taken by the regulator. The impact of moratorium, if any, would be only seen in the December and March quarters. So, they may want to see our performance during these quarters,” Goel told newspersons in a virtual conference on Thursday.

It is to be noted that most of the other banks that were under PCA earlier were brought out of the PCA ambit once they were able to adhere to the regulatory guidelines.

Q2 Results

For the quarter ended September 30, 2020, the bank posted a net profit of around ₹30 crore, when compared to a net loss of ₹892 crore same period last year.

On a sequential basis, net profit improved from ₹21 crore registered in the April-June 2020 quarter.

Total provisions decreased by 38 per cent to ₹1,300 crore during the period under review, against ₹2,099 crore in the same period last year.

The gross NPAs came down to 11.62 per cent (21.87 per cent), while net NPA decreased to 3.63 per cent (7.32 per cent). The bank is hopeful of bringing down its gross NPA to single digit and net NPA to less than three per cent by March 2021.

Talking about restructuring, Goel said around ₹5,000 crore worth loans could require restructuring. Of the total number of customers who had availed moratorium, close to 52 per cent have already paid, and over 25 per cent have paid more than 25 per cent of the outstanding. So, the need for restructuring might not be too big.

“While it is still premature to comment on the amount of restructuring that may be needed, but based on current assumptions, it may not be more than ₹5,000 crore,” he said.

Capital raising

The bank, which is expecting 5-10 per cent growth in credit this fiscal, is looking to raise close to ₹3,000 crore worth capital.

UCO Bank is exploring all available options, including QIP, preferential allotment and ESPS to raise capital.

“We have requested LIC for preferential allotment; they currently hold around 2-3 per cent and have headroom to increase to 14 per cent, so we can raise close to ₹1,500 crore from LIC. This apart, we are also exploring possibility of QIP, ESPS etc whenever the market turns opportune we might consider,” he said.

The bank’s scrip closed at ₹12.41, down by 1.51 per cent on the BSE on Thursday.

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Published on October 22, 2020
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