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State-owned lender UCO Bank’s net profit in the quarter ended June 2024 (Q1 FY25) more than doubled year-on-year at Rs 551 crore, helped by improved net interest margin and a steady asset quality profile. The Kolkata-based public sector bank had posted a net profit of Rs 223 crore in the quarter ended June 2023 (Q1 FY24).
Sequentially, the Kolkata-based public sector lender’s profit rose marginally from Rs 526 crore in the quarter ended March 2024 (Q4 FY24). Its stock closed 1.51 per cent up at Rs 55.95 per share on BSE.
Net interest income (NII) expanded 12.2 per cent to Rs 2,254 crore in Q1 FY25, compared to Rs 2,009 crore in the same quarter a year ago. Sequentially, NII declined from Rs 2,187 crore in Q4 FY24.
Its net interest margin (NIM) improved to 3.09 per cent in Q1 FY25, compared to 2.86 per cent in Q1 FY24. Sequentially, NIM was up from 3.03 per cent in Q4 FY24, according to an analyst presentation.
In the post-result virtual media meet, Ashwani Kumar, managing director and chief executive, UCO Bank, said the bank continues to maintain guidance for NIM to be around 3.0 per cent as pressure on deposit rates is still there. This pressure is expected to continue until some rate cut is announced.
Its cost of deposits rose to 4.79 per cent in Q1 FY25 from 4.61 per cent in Q1 FY24. However, they declined sequentially from 4.82 per cent in Q4 FY24.
Non-interest income rose 31.91 per cent year-on-year to Rs 835 crore. Sequentially, it fell by 25.77 per cent from Rs 1,125 crore in Q4 FY24.
The lender’s provisions for non-performing assets (NPAs) rose from Rs 389.3 crore in Q1 FY24 to Rs 396.6 crore in Q1 FY25.
Advances expanded 17.64 per cent year-on-year to Rs 1.93 trillion in Q1 FY25. Out of this, the retail book expanded by 21.84 per cent year-on-year to Rs 42,985 crore at the end of June 2024.
Total deposits increased 7.39 per cent year-on-year to Rs 2.68 trillion at the end of June 2024. The share of low-cost deposits — current account and savings accounts (CASA) — rose to 38.62 per cent at the end of June 2024, from 38.10 per cent a year ago, according to an analyst presentation.
The bank expects to grow the loan book by 12-14 per cent and deposits by 8-10 per cent in FY25, Kumar added.
The asset quality profile improved with gross non-performing assets (NPAs) declining to 3.32 per cent in June 2024 from 4.48 per cent in June 2023. Net NPAs also declined to 0.78 per cent in June 2024 from 1.18 per cent a year ago.
The provision coverage ratio (PCR), including written-off accounts, improved to 95.76 per cent in June 2024 from 94.88 per cent a year ago.
Capital adequacy stood at 17.09 per cent with Tier I of 14.75 per cent at the end of June 2024. The bank has approval to raise capital up to Rs 4,000 crore. It may visit the capital market to raise part of the capital in the current quarter or next quarter after government approval, Kumar added.
First Published: Jul 22 2024 | 4:54 PM IST
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