Uco Operating Profit At Rs 15 Cr

At the end of the first year of the strategic revival plan (SRP) in 1997-98, the Calcutta-based ailing Uco Bank has claimed to have made achievements on nine counts, including earning an operating profit of about Rs 15 crore.

In an in-house document, the bank has noted that it has increased profits from overseas operations, achieved higher growth in savings deposit, and its credit growth has gone up over the industry average.

It has further been recorded that the bank has improved investment yield, and reduced NPAs more than the budgeted amount, while non-interest income has increased by 66 per cent. Growth in net interest income has been found to be 19 per cent and the savings in operating expenses were to the extent of 4.6 per cent in budgeted amount.

 

With this performance behind it, the bank has put in place a strategy which will see it earn net profit at the end of the current year of 1998-99. There will be a 10 per cent increase in profit from overseas operation, the bank document says.

The domestic deposit base is set to reach Rs 15,000 crore at the end of the current year against the total of Rs 14,461 crore mobilised in 1997-98 both domestically and overseas. Aggregate deposit at March-end 1998 was Rs 12,129 crore against the budgeted amount of Rs 12,000 crore.

Growth in aggregate deposit stood at Rs 1,731 crore in 1997-98 against Rs 1,118 crore the previous year. Growth under this heading excluding certificate of deposits (CDs) amounted to Rs 1,825 crore which is 18.25 per cent against the industry average of 18.90 per cent. The confidential bank document attributes the marginal fall in the deposit growth to disinclination of the bank to join the rate war, particularly for the short-term deposits.

The bank has in 1997-98 has deployment growth of 19.95 per cent against the industry average of 19.60 per cent. Advances as a whole stood at Rs 5,592 crore in the year under review. Yield on credit deployment stood at 10.20 per cent which was lower than 11.30 per cent achieved in 1996-97. However, there has been a decline in time weighted average prime lending rate (PLR) of the bank by 121 basis points to 14.29 per cent. As a result, there was a marginal improvement in yield on credit portfolio.

On tackling non-performing assets (NPAs), the SRP has set the target of lowering it below 14 per cent in the domestic sector. The bank has globally brought it down from 15.68 per cent in 1996-97 to 13.73 per cent in 1997-98, which takes into account its domestic and overseas branch operations.

Net NPA as percentage of net credit in 1996-97 was 17.37 per cent which dipped to 15.32 per cent in 1997-98. In this category comes the recovered amount of Rs 130.78 crore, Rs 125.17 crore as write-off, Rs 13.92 crore as upgradation of some existing credit.

The bank note says that in addition to the recovered amount of Rs 130.78 crore overdue interest to the extent of Rs 26.30 crore had been recovered in 1997-98.

Moreover, settlement advisory committee cleared 59 cases of compromised proposals involving Rs 66.93 crore. Compromised amount stood at Rs 47.30 crore.

Investment is another area where the bank has performed creditably. Improvement in yield has been recorded in all types of investments.

Portfolio classification shows that Uco Bank has improved yields on the SLR securities, non-SLR securities, special securities respectively from 1996-97 to that of 1997-97 in the following manner, percentage-wise: 11.33 to 11.61, 13.06 to 14.24, 9.32 to 9.32. Aggregate portfolio shows that it has improved from 10.69 per cent in 1996-97 to 11.32 per cent in 1997-98.

Profit on sale of shares and securities also improved and amounted to Rs 13.84 crore in 1997-98 against the loss of Rs 1.43 crore in 1996-97.

Against the provision requirement of Rs 10.30 crore the bank has held Rs 74.96 crore leaving with an excess provision of Rs 64.66 crore.