UCO Bank sees fivefold rise in net profit

Net interest income rose 16% to Rs 1,562 cr

State-run UCO Bank's final quarter net profit for FY14 grew more than five times at Rs 285 crore against Rs 50 crore a year ago, as it earned more interest income and sold non-performing assets (NPAs) to asset restructuring companies (ARCs).

The net interest income (or the difference between interest income and interest expense) rose by 15.87 per cent to touch Rs 1,562 crore during the quarter under review as against Rs 1,348 crore in the year-ago period. The domestic net interest margin for the final quarter stood at 2.87 per cent, while the same was 3.02 per cent for the full financial year.

“Our strong performance helped earnings growth during the quarter. We have continued to remain focused on low-risk retail advances, stepped up loan recovery and selling non-performing assets (to asset reconstruction companies). Our cost of deposits have come down,” Arun Kaul, chairman and managing director of the bank, told reporters after announcing the final quarter results here on Wednesday.

The bank sold off NPAs worth Rs 925 crore to ARCs during the quarter under review. It made a recovery of Rs 1,860 crore out of which Rs 1,311 crore was cash recovery, while Rs 550 crore loans witnessed upgradation.

Gross NPA for the bank came down to 4.3 per cent in Q4 as against 5.42 per cent in the year-ago period. Net NPA stood at 2.8 per cent at the end of the quarter. Net bad loans during final quarter of FY13 were at 3.17 per cent. The bank made provisioning of loans worth Rs 546 crore in the quarter under review.

“The need for provisioning was much less this quarter on a y-o-y basis. The current NPAs are not large corporates contrary to earlier scenario so recovering these loans would not be much of an issue,” said Kaul.

Fresh slippages during the quarter stood at Rs 1,761 crore. The total restructured loan portfolio was Rs 11,165 crore at the end of March this year compared to Rs 12,870 crore at the end of December 2013. \"Our loan restructuring loan pipeline is not big,” he said.

Kaul said he was hopeful of attaining a credit growth of 16-17 per cent in the ongoing financial year and focus would remain on low risk businesses and customer acquisitions. “We are getting cheap stable deposits from customers,” he added. UCO Bank's capital adequacy ratio under Basel III stood at 12.68 per cent as on March this year.

The shares of the bank closed at Rs 105.65, down -- less than a per cent after touching a 52-week high of Rs 110.70 on the BSE on Wednesday.