UCO Bank sells Rs 1,545 crore of NPAs in Q4

Country's largest lender SBI reportedly planning to sell close to Rs 5,000 cr NPAs before end of current financial year

Kolkata-headquartered UCO Bank on Thursday said it has sold non-performing assets (NPAs) worth Rs 1,545 crore since January 1, 2014 — almost five times the value of bad loans it sold in the previous three months.

“We have been selling NPAs to asset reconstruction companies (ARCs) through auctions. In the current (January-March) quarter, we have sold Rs 1,545 crore of NPAs. In the previous quarter, it was Rs 322 crore,” Arun Kaul, chairman and managing director of UCO Bank, said while responding to questions in a seminar organised by the MCC Chamber of Commerce and Industry here.

Kaul, however, did not name the ARC buying these bad assets. “It was a different ARC in the third quarter and a different one this quarter,” he said.

With the slowdown in economic growth and stress on banks’ credit quality, lenders have been increasingly selling bad loans to ARCs. The country’s largest lender, State Bank of India (SBI), is reportedly planning to sell close to Rs 5,000 crore of NPAs before the end of current financial years. Other lenders, including Oriental Bank of Commerce (OBC) and Dena Bank, have also put their bad loans on the block. Kaul also said that UCO Bank's credit quality was unlikely to deteriorate in the current quarter. “Our NPAs (in January-March) will be lower than in the third quarter,” he added.

The state-run lender’s gross NPA ratio was 5.20 per cent, while net bad loan ratio was at 3.06 per cent at the end of December.

Kaul remained confident that despite the uncertain economic environment and slow business growth UCO Bank will be able to grow its deposits and advances at the rate of 16 per cent while maintaining its domestic net interest margin at three per cent in the current financial year.