Riding on the back of higher interest income, UCO Bank registered 22 per cent rise in net profit at ₹124 crore for the quarter ended June 30, 2022, against ₹102 crore in the same period last year.
Net interest income grew by 13 per cent at ₹1,649 crore during the quarter under review against ₹1,460 crore same period last year.
The other income took a hit as it took a mark to market provision of ₹653 crore on account of treasury loss during the quarter under consideration. The bank had taken a MTM provisioning of close to ₹216 crore during the fourth quarter of last financial year (Q4 FY22).
Other income was down at (₹54 crore) against ₹857 crore same period last year. Operating profit was down by 63 per cent at ₹440 crore compared with ₹1,173 crore last year.
According to Soma Sankara Prasad, MD & CEO, UCO Bank, the steep decline in other income and operating profit was primarily on the back of the MTM provisioning on account of treasury loss. However, moving forward, there might not be further need for any provisioning and the bank expects some write back happening.
“The repo rate increase is front loaded and I feel the yields have peaked and we expect some moderation on the yields front. So we are not expecting any further requirement for MTM provisioning infact there could be some write back in the July-September quarter of current fiscal,” Prasad said while addressing a virtual press conference post announcing the quarterly results on Friday.
The bank has witnessed an improvement in asset quality and has seen a decline in both gross and net non-performing assets (NPA). Gross NPA has come down to 7.42 per cent (9.37 per cent) while net NPA came down to 2.49 per cent (3.85 per cent).
Total provisions came down by nearly 76 per cent at Rs 247 crore (Rs 1014 crore) during the quarter under review. UCO Bank had restructured loans to the tune of Rs 3373 crore and there was some slight stress in around 25 per cent of the restructured book, he said.
“Nearly 25 per cent or close to Rs 925 crore worth restructured loans are under some stress where in one or two instalments are due but they have not slipped into NPA. We are regularly following up, monitoring and hope to recover these dues,” he said.
The bank’s net profit margin (NPM) improved to 3.26 per cent (2.30 per cent).
UCO Bank expects 12-13 per cent growth in credit during the current fiscal backed by a steady demand from both corporate and retail sectors.
Though the bank has board approval for raising fresh capital to the tune of around ₹1,000 crore, it is comfortably capitalised at a capital adequacy ratio of 14.13 per cent and may not require to raise capital during the current fiscal, he said.
The bank’s scrip closed at ₹11.83, down by 2.47 per cent on the BSE on Friday.
August 05, 2022