Uco Bank Q2 results: Profit surges 7-fold

 

State-owned Uco Bank reported a near seven-fold jump in net profit for the September quarter, riding on higher interest income and write-back of provisions made earlier.

Its net profit stood at Rs 205.4 crore as against Rs 30.1 crore in the year-ago period.

Net interest income (NIM), a key parameter of profitability, remained flat at 2.79% for the quarter under review, despite lower lending rates.

"We expect NIM to be at 3% or more in the near future," managing director AK Goel said. He said the lower cost of funds, better collection efficiency from stressed accounts as well as higher credit growth would help in the improvement of NIM.

We expect advances to grow around 10% for the full year, Goel added.

The Kolkata-based lender's operating profit rose 24% at Rs Rs 1,334 crore as compared with Rs 1,076 crore in the year-ago quarter. Net interest income rose about 15% at Rs 1,598 crore from Rs 1,393 crore over the same period last year. Other income grew 31.2% YoY to Rs 936 crore.

Goel said the bank made an additional provision of Rs 250 crore towards Covid-19 related risk on asset quality, taking the total additional Covid-related provision to Rs 750 crore. Total bad loan provisions rose to Rs 1,595 crore in the September quarter from Rs 1,032 crore in the year-ago period.

The bank's total provision, however, came down to Rs 1,019 crore during the period from Rs 1,301 crore on account of write-backs of provisions made earlier. The bank has recovered Rs 550 crore from written-off accounts, taking the total recovery and upgradation to Rs 1,876 crore during the quarter.

Uco's asset quality improved with the gross non-performing assets (NPA) ratio falling to 8.98% at the end of September from 11.62% a year back. Net NPA stood at 3.37%, down from 3.63%. Its provision coverage ratio rose to 90% from 89.82% over the same period.

Its total advances grew 5.7% to Rs 1.22 lakh crore with retail, agriculture and MSME sectors now contributing about 64% to it.

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RBI lifts PCA restrictions from UCO Bank

 

State-owned UCO Bank will no longer be subject to strict lending curbs imposed by the Reserve Bank of India (RBI) in May 2017, as the central bank said on Wednesday that the lender has been taken out of the prompt corrective action (PCA) restrictions.

Following UCO Bank’s exit, two banks -- Indian Overseas Bank and Central Bank of India -- remain under PCA. The central bank uses PCA framework to rein in banks that have breached certain regulatory thresholds in bad loans and capital adequacy. PCA entails curbs on high-risk lending, setting aside more money on provisions and restrictions on management salary

UCO Bank, RBI said, has provided a written commitment that it would comply with the norms of minimum regulatory capital, net non-performing asset (NPA) and leverage ratio on an ongoing basis. The Kolkata-based lender has also apprised RBI of the structural and systemic improvements that it has put in place to help in continuing to meet these commitments.

“The performance of the UCO Bank, currently under the prompt corrective action framework of RBI, was reviewed by the Board for Financial Supervision. It was noted that as per its published results for the year ended 31 March 2021, the bank is not in the breach of the PCA parameters," RBI said

As on 31 March, UCO Bank’s net NPA ratio stood at 3.94%, down 151 basis points (bps) from the same period last year. Its total capital adequacy ratio under Basel III was at 13.74%, up 204 bps from Q4 of FY20.

RBI governor Shaktikanta Das said on 6 August that it has been taking banks out of the restrictive framework based on assessments.

“We keep on reviewing that position. Recently, we removed one public sector bank from PCA tag. And as and when required requests are received, we analyse it, if it meets RBI’s regulatory requirements and if in our assessment, we feel confident that it’s a fit case, the RBI will do the needful. So, we have been taking banks out of PCA," said Das.

The PCA framework was introduced in December 2002 as a structured early intervention mechanism along the lines of the Federal Deposit Insurance Corp.’s (FDIC) PCA framework. These regulations were later revised in April 2017. In a speech on 12 October 2018, then RBI deputy governor Viral Acharya had defended the revised PCA norms, calling it the required medicine to prevent further haemorrhaging of bank balance sheets. He had added that in spite of their worse capitalization and stressed assets ratio compared to other banks, PCA banks had credit growth that was as strong as that of other banks up until 2014.

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UCO Bank Q1 results: Net profit jumps over 4-fold

State-owned UCO Bank on Tuesday posted over four-fold jump in its net profit to Rs 101.81 crore for the first quarter ended June 30, as bad loans fell significantly.The bank had reported a net profit of Rs 21.46 crore in the same quarter of the previous fiscal.

Sequentially, the net profit rose 27 per cent from Rs 80.03 crore in the March 2021 quarter.The total income during Q1 FY22 increased to Rs 4,539.08 crore, against Rs 4,436.57 crore in Q1 FY21, UCO Bank said in a regulatory filing.However, it was down from Rs 4,936.75 crore in the preceding March quarter.

Interest income during the quarter fell 2.5 per cent to Rs 3,569.57 crore, while income from other sources rose 25.3 per cent to Rs 969.51 crore.The Kolkata-headquartered lender trimmed its gross non-performing assets (NPAs or bad loans) significantly to 9.37 per cent of the gross advances as of June 30, 2021, as against 14.38 per cent at June-end 2020.

In value terms, the gross NPAs fell to Rs 11,321.76 crore from Rs 16,576.43 crore.Net NPAs were down at 3.85 per cent (Rs 4,387.25 crore) from 4.95 per cent (Rs 5,138.18 crore).The bank's provisions for bad loans and contingencies were, however, up at Rs 1,127.11 crore in the reported quarter from Rs 931.67 crore in the year-ago period.

Of this, the provisions for NPAs stood at Rs 844.76 crore, up from Rs 564.78 crore.Further, UCO Bank said it has kept the account of Delhi Airport Metro Express Pvt Ltd (DAMEPL) as standard, as per the Supreme Court order and RBI guidelines.

The bank said it has not treated an amount of Rs 194.14 crore towards DAMEPL as NPA. As required, the provision held against this outstanding is Rs 100.95 crore, it noted.Also, for accounts covered under the provisions of the Insolvency and Bankruptcy Code (IBC), the bank is holding a 100 per cent provision (including technical write-off) against a total outstanding of Rs 4,730.28 crore as of June 30, 2021, it added.

Besides, outstanding worth Rs 278.17 crore stands as restructured advances as of June 30, 2021, relating to a total of 1,724 MSME (micro, small and medium enterprises) sector accounts.Among others, the bank said it has exposure with two borrower's accounts belonging to the same group, and as per the NCLT Kolkata order, it has not declared these accounts as NPAs."Bank has filed an appeal against the order of NCLT, Kolkata Bench," it added.

On the COVID-19 induced moratorium related refund of interest on interest (or compound interest), UCO Bank said it has created a provision of Rs 35.35 crore as of March 31, 2021, towards interest relief.The same is yet to be refunded or adjusted, it added.The total COVID-19 related provisions held by the lender is Rs 500 crore.

UCO Bank also reported nine borrowal accounts as fraud during the quarter, involving a total amount of Rs 429.21 crore."During the current quarter, the bank has appropriated its entire accumulated losses of Rs 12,657.03 crore as of March 31, 2021, by utilising the balance standing to the credit of share premium account of the bank," it said.

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Uco Bank Q4 net profit jumps nearly five-fold

 

State-owned Uco Bank reported nearly five-fold jump in net profit at Rs 80 crore for the March quarter largely riding on treasury gains. Net profit was Rs 17 crore in the year ago period.

The bank also made Rs 167 crore net profit for the full financial year after continuous loss in the previous five financial years.

Operating profit grew 26% at Rs 1533 crore as against Rs 1217 crore over the same period. Its net interest income rose 12.6% at Rs 1413 crore against Rs 1255 crore while other income including earnings from treasury rose 78% at Rs 1370 crore from Rs 769 crore over the same period.

The bank's board approved a plan to raise up to Rs 3,000 crore by selling shares to help the lender create a capital buffer as suggested by the Reserve Bank of India to ward off the pandemic-led stress. Its capital adequacy ratio stood at 13.74% with core capital at 11.14% at the end of March.

Uco, which is 94.4% owned by the government, said that it would contemplate a follow-on public offer (FPO), qualified institutional placement or preferential issue for capital raising.

The bank's advances grew by 3% to Rs Rs 1.18 lakh crore at the end of March. Gross non-performing assets improved to 9.59% from 16.77% a year back with net NPA falling to 3.94% from 5.45%. The provision coverage ratio rose to 88.4% from 85.5% earlier

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Eye on this PSBs to be privatise: Govt mulls corporate, foreign bank participation

 

Indian policymakers are discussing ways to open up the banking sector via easing norms for corporate and foreign bank participation in acquiring public sector banks that the central govt is looking to privatise, sources with knowledge of the matter told ET Now.

Currently, industrial houses that have less than 60% of their turn over from non-financial entities are not allowed to apply for bank licences and their equity participation is also limited to 10%, as regulators have feared that this could risk financial stability because of the propensity of the corporates to milk banks for ‘self-loans.’

ET Now learns that there’s a rethink on the existing policy between policymakers even as the discussions are at an “early stage”. Sources say the government and the central bank may move with “abundant caution” and will take into account global experience and prior experience as well. 

Greater regulatory vigilance in terms of preferring corporate players with a long term 10-year business plan, “Fit & Proper Criteria” for corporate participation for taking equity in banks, tighter norms for related party transactions could be put in to ensure no excessive concentration or risks to financial stability. 

"We need to open up the banking system but the move will be designed with “abundant caution” and will need stonewalling from misuse. Opening up banking sector will come with greater regulatory vigilance on banks, fin institutions," one of the officials told ET Now.

Policymakers are also discussing allowing foreign banks with Indian subsidiaries to participate in buying government stake when state-owned banks like Central Bank of India, Bank of India, Punjab and Sind Bank, IOB and UCO Bank are privatised. 

The banking sector has been plagued with rising bad loans leading to decline in capital adequacy ratios and in some cases failure. Recently, Yes Bank was saved through government and RBI intervention when SBI lead consortium infused more capital into the private lender to save it from bankruptcy. Last week the government and RBI had to intervene to aid the rescue of Lakshmi Vilas Bank by the Indian subsidiary of DBS Bank, a move that reflected a change in thinking of the central bank and the government. 

Besides DBS, there are only one other foreign bank that has Indian subsidiaries -- SBM Bank. SBM Bank (India) Limited (Subsidiary of SBM Group) and DBS Bank India Limited have been issued licence on December 6, 2017, and October 4, 2018, respectively for carrying on banking business in India through a wholly-owned subsidiary. 

The widening of this move to allow foreign banks to buyout public sector banks when the government decides to privatise them will not only increase competition in the sector leading to efficiency but will also make a paradigm shift in the sector. The larger aim is to make Indian banks globally competitive. 

The discussion on this is at early stage but the policy could be timed with the government's larger privatisation policy that will allow selling of some Indian public sector banks. Bank of India, Central Bank of India, Bank of Maharashtra, Punjab & Sind Bank are some of the state-run lenders that the government is looking to privatise.

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UCO Bank Q2 results: Reports Rs 30-cr net profit

State-owned UCO Bank on Thursday reported a net profit of Rs 30.12 crore for the second quarter ended September 30. The bank had posted a net loss of Rs 891.98 crore during the corresponding quarter of the previous financial year.

Sequentially, the profit during the second quarter of 2020-21 was higher from Rs 21.46 crore in the first quarter ended June 2020.

Its total income was down at Rs 4,326.14 crore during the September 2020 quarter, from Rs 4,533.51 crore a year ago, UCO Bank said in a regulatory filing.

Interest income fell to Rs 3,614.61 crore during the quarter, compared with Rs 3,804.64 crore in the year-ago period.

The bank improved on its asset quality significantly by bringing down the gross non-performing assets (NPAs) to 11.62 per cent of the gross advances as on September 30, 2020, from 21.87 per cent as of September 2019.

In absolute value, the gross NPAs were down at Rs 13,365.74 crore as against Rs 25,665.14 crore.

Similarly, the net NPAs decreased to 3.63 per cent (Rs 3,831.88 crore) as against 7.32 per cent (Rs 7,238.33 crore).

Provisioning for bad loans also fell to Rs 1,032.14 crore, from Rs 2,034.07 crore a year ago.

The overall provisioning for bad loans and contingencies stood at Rs 1,300.20 crore, down from Rs 2,099.02 crore a year ago.

UCO Bank also said that as per a Supreme Court order and necessary guidelines issued by the Reserve Bank of India (RBI), it has kept Delhi Airport Metro Express Pvt Ltd as a standard account.

However, necessary provision of Rs 77.54 crore has been held by the bank against the amount of Rs 194.14 crore which has not been treated as NPA as per required norms.

"As per RBI guidelines issued during the financial year ended March 31, 2018, in respect of select borrowers accounts covered under provisions of the Insolvency and Bankruptcy Code (IBC), against total outstanding of Rs 762.49 crore, the bank is holding a provision of Rs 735.41 crore as on September 30, 2020," UCO Bank said.

The non-performing loan provisioning coverage ratio stood at 89.82 per cent as on September 30, 2020.

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UCO Bank reports net profit in Q1

UCO Bank on Friday reported a net profit to Rs.21.45 crore for the June quarter on the back lower provisions and higher other income.

The state-owned lender had posted a net loss of Rs.601.45 crore in the same quarter last year.

Net interest income, or the difference between interest earned on loans and that paid on deposits, decreased 5.11% to Rs.1266.78 crore for the quarter ended 30 June against Rs.1334.97 crore reported during the same quarter of the previous fiscal.

Other income, which includes core fee income, rose 22.83% year-on-year to Rs.773.93 crore during the period under review from ₹630.08 crore.

The lender made provisions worth Rs.1180.37 crore, versus Rs.1802.89 crore during the same quarter of the preceding fiscal.

Gross NPAs, as a percentage of gross advances, were at 14.38% compared with 24.85% as of June 2019 and 16.77% as of March, 2020.

After provisions, net NPA ratio was at 4.95% against 5.45% during January-March and 8.98% in the year-ago quarter.

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This PSB ready to come out of PCA framework: Official

State-owned UCO Bank, which posted net profit for two successive quarters, is ready to come out of the RBI's prompt corrective action (PCA) framework, an official said on Saturday.

In May 2017, the central bank had initiated PCA against the lender due to high non-performing assets and negative return on assets.

"We are ready to approach the RBI to come out of the framework, as the bank posted net profit for two successive quarters," the official said.

He said non-performing assets and capital adequacy norms levels as on June 30 also entitles the bank to move out of the lending constraints' purview.

Net NPA of UCO Bank during the quarter to June was lower at 4.95 per cent, while the capital adequacy ratio stood at 11.65 per cent, he said.

The bank had reported a net profit of Rs 21.46 crore in the first quarter.

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