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“The main reasons for a drop in profit are the slow growth of advances and slippages. Earlier, we had expanded in corporate sectors. Many of these assets have slipped into NPA,” said Arun Kaul, chairman and managing director, UCO Bank.
The bank’s net NPA for the quarter ended March 31, 2015 was nearly Rs 6,330 crore, against Rs 3,556 crore in the corresponding quarter a year ago. In terms of percentage, the bank’s net NPA at the end of March 31, 2015 was 4.3 per cent, against 2.38 per cent in the year-ago period.
There was a gross NPA addition of nearly Rs 2,074 crore in the fourth quarter of FY15, of which restructured assets worth Rs 961 crore slipped, with the highest slippages being noted in power, iron & steel, and infrastructure sectors.
The bank has created a pool of NPA salable assets of nearly Rs 3,000 crore. In the last quarter, the bank could sell NPA worth nearly Rs 115 crore to asset reconstruction companies.
UCO Bank made a total provision of Rs 1,019 crore in the quarter under review, against Rs 1,089 crore in the corresponding period last year. During FY15, the net additions to NPA was Rs 3,644 crore. Fresh NPA additions for the same period was Rs 7,551 crore, of which the slippages from restructured loans to the NPA category were Rs 2,559 crore.
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The bank’s total advances showed a growth of nearly 3.6 per cent, while deposits grew 7.4 per cent on a year-on-year basis as on March 31, 2015. The bank’s capital adequacy ratio as on March 31, 2015 was 12.18 per cent.
With oil prices going down, the bank has also been witnessing a drop in deposits, especially from Iran, from a peak level of Rs 23,000 crore to Rs 17,000 crore. UCO Bank facilitates transactions, especially oil-related, with Iran.
“In the backdrop of prolonged economic slowdown and uneven recovery leading to slippages in asset health, the bank has consistently taken a decision to pursue selective growth. It has been focusing on low risk assets and retail,” said Kaul.
