 "(From left) R K Takkar, MD & CEO and G Subramania Iyer, executive director, UCO Bank, at a press meet to announce bank's financial results in Kolkata (Pic: Subrata Majumder)")
UCO Bank today posted a net loss of Rs 440.56 crore for the first quarter of the present financial year, against a net profit of Rs 256.70 crore in the same quarter last year. However, on a sequential basis, net loss came down, as in the quarter ended 31 March 2016, the bank had posted a net loss of around Rs 1,777. 22 crore.
High slippages in sectors like iron and steel, along with increased provisioning in the last quarter led to the losses, said R K Takkar, chairman and managing director, UCO Bank, addressing a press meet.
In the last quarter, some of the prominent accounts that slipped into NPA include, Essar Steel, Bhushan Energy, GVK Power, Sterling Global and Sterling SEZ, informed Takkar. The total exposure to these five accounts in bank's books is close to Rs 1300 crore. In the last quarter, the fresh slippages in the bank was around Rs 3,117 crore, against Rs 1,252 crore in the same period last year.
"There have been fresh slippages in some of the large accounts, mainly in the iron and steel and power sectors. More than 50 per cent of the fresh slippages have been in the large accounts," said Takkar.
The total provisions of the bank in the last quarter stood at Rs 1,250.50 crore, against Rs 763.56 crore in the same period last year.
This apart, the bank's pool of low cost deposits from Iran rupee trade settlement mechanism has also come down to around Rs 9000 crore in the last quarter, against Rs 15000 crore in Q1 of FY16, which contributed to increase in cost of funds.
In the last quarter, the net NPA of the bank stood at 10.04 per cent , against 4.53 per cent in the same quarter last financial year. Sequentially too, the net NPA increased as in Q4 of FY16, it stood at 9.09 per cent. The gross NPA of the bank touched 17.19 per cent in the last quarter, against 7.30 per cent in Q1 of FY16, and 15.43 per cent in Q4 of FY16.
" One reason for NPAs as a percentage to go up is that the total advances have gone down. We expect some credit growth in the next quarter, along with some upgradation and recovery, which will bring down the NPAs as a percentage," said Takkar. Total advances of the bank stood at around 1.31 lakh crore in the last quarter, against around Rs 1.49 lakh crore in Q1 of FY16.
UCO Bank is going slow in credit disbursements, especially to corporate entities. The bank is expecting both credit and deposit growth in the range of around 6 per cent this financial year, against the earlier target of around 8 per cent.
The bank is expecting a rate cut of around 25 basis points in the next RBI monetary policy.
"If inflation is under control and the monsoon is normal, we expect rate cuts to the tune of 25 basis points in the next RBI policy," said Takkar.
The bank has intensified its recovery efforts, and in the last quarter, the total cash recovery and upgradation stood at Rs 1427 crore, against Rs 620 crore in the first quarter of FY16. The bank is expecting a recovery of around Rs 1600 crore in the present quarter, said Takkar. The bank would go for resolution in small accounts and look for possible restructuring mechanisms, including S4A restructuring for bigger accounts, he added.
This year, the bank has vetted the total capital requirement at around Rs 4,600 crore. Of this, the bank already has an approval to receive Rs 1,033 crore from the government as capital infusion. In addition, the bank would raise around Rs 600 crore as tier II capital and Rs 2,000 crore as additional tier I bonds.
