 "UCO Bank's Q3FY25 results: Net profit rises 27% on better margins")
Public sector lender UCO Bank’s net profit rose by 27.04 per cent year-on-year (Y-o-Y) to Rs 639 crore during the third quarter (Q3FY25), aided by an improvement in margins and a rise in non-interest income. However, its provisions for non-performing assets (NPAs) more than doubled Y-o-Y to Rs 263.3 crore.
Net interest income (NII)—the difference between interest earned and interest expended—rose by 19.62 per cent Y-o-Y to Rs 2,378 crore in Q3FY25, compared to Rs 1,988 crore in the same quarter the previous year. Net interest margin (NIM) improved to 3.17 per cent in Q3FY25 from 2.84 per cent in Q3FY24.
Ashwani Kumar, managing director and chief executive, UCO Bank, said in a post-results virtual media interaction that the bank is sticking to its guidance of NIMs between 3.0–3.10 per cent by the end of March 2025 (FY25).
Non-interest income, comprising fees, treasury revenues, etc., rose to Rs 1,185.9 crore in Q3FY25 from Rs 860.8 crore in Q3FY24.
The lender’s provisions for NPAs rose to Rs 263.3 crore in Q3FY25 from Rs 116.3 crore in Q3FY24, mainly due to ageing provisions for old bad loans, Kumar said.
The asset quality profile improved, with gross NPAs declining to 2.91 per cent in December 2024 from 3.85 per cent in December 2023. Net NPAs also declined to 0.63 per cent in December 2024 from 0.98 per cent in December 2023. The provision coverage ratio (PCR), including written-off accounts, stood at 96.16 per cent in December 2024, up by 95 basis points over the level in December 2023. ALSO READ: HDFC Bank Q3 Preview: Analysts estimate weak profit growth; NIM, NPA eyed
Advances grew by 16.44 per cent Y-o-Y to Rs 2.08 trillion in Q3FY25. Retail advances grew by 31.01 per cent Y-o-Y to Rs 50,055 crore in December 2024.
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UCO Bank's total deposits increased by 9.36 per cent Y-o-Y to Rs 2.80 trillion. The share of low-cost deposits—current account and savings account (CASA)—increased to 37.9 per cent in December 2024 from 37.6 per cent a year ago.
The lender expects advances to grow by 12–14 per cent Y-o-Y and deposits by 8–10 per cent by the end of March 2025 (FY25), Kumar said.
The bank’s capital adequacy stood at 16.25 per cent, with Common Equity Tier-1 (CET-1) at 13.81 per cent at the end of December 2024.
Kumar said the bank is looking to raise fresh equity capital in the current quarter (Q4FY25) through a Qualified Institutional Placement (QIP) of Rs 2,000 crore.
The lender is in talks with prospective investors, including mutual funds. The QIP will reduce the Government of India’s (GoI) stake by three per cent, he said. The GoI’s stake stood at 95.39 per cent in the bank at the end of December 2024.
Its stock closed almost flat at Rs 44.26 per share on the BSE.