UCO Bank's Profitable Leap: A Financial Turnaround

UCO Bank reported a significant 50% increase in net profit to Rs 603 crore for the September quarter. The bank's interest income and net interest margin improved, with credit growth expected to rise by 12-14% this fiscal year. A resolution plan is underway for debt exposure to MTNL.

State-owned UCO Bank announced a remarkable 50% increase in its net profit, reaching Rs 603 crore for the September quarter, primarily driven by an upswing in interest income.

The previous year's corresponding quarter had seen a net profit of Rs 402 crore, highlighting significant growth.

Total income for the bank rose to Rs 7,071 crore in this quarter, compared to Rs 5,866 crore in the same timeframe the year prior, according to the bank's regulatory filing.

Interest income hit Rs 6,078 crore this quarter, up from Rs 5,219 crore the previous year.

Net interest income climbed 20% to Rs 2,301 crore from Rs 1,917 crore in the year-ago period.

Net interest margin saw an increase from 2.84% to 3.10% by the end of the second quarter of the last fiscal year.

UCO Bank's Managing Director and CEO, Ashwani Kumar, expressed optimism about maintaining the current growth momentum.

The return on assets increased to 0.73% at the end of September 2024, with expectations for further improvement in the succeeding quarters.

The guidance for the net interest margin this fiscal year is set at 2.9-3%, anticipating a rate cut by the Reserve Bank of India by March 2025.

The bank is targeting a 12-14% credit growth rate for the current financial year.

UCO Bank successfully reduced gross non-performing assets to 3.18% of total loans from 4.14% a year ago, with net NPAs decreasing to 0.73% from 1.11%.

Regarding debt exposure to MTNL, the bank has extended Rs 245 crore and set aside Rs 120 crore for this liability, with a resolution plan under discussion alongside MTNL.

The capital adequacy ratio stood steady at 16.84% with a Tier-I capital ratio of 14.59% as of September.

(With inputs from agencies.)