UCO Bank Q1 net profit more than doubles to Rs 551 cr on improved NIMs

QIP likely in Q2 or Q3 for capital raise

State-owned lender UCO Bank’s net profit more than doubled in the first quarter of financial year 2024-25 (Q1FY25) when compared to the same period a year ago,  helped by improved net interest margin and steady asset quality profile.

The Kolkata-based public sector bank posted a net profit of Rs 551 crore in Q1FY25, up from Rs 223 crore it had reported in the first quarter of financial year 2024 (Q1Fy24).

Sequentially, the public sector lender’s profit rose marginally from Rs 526 crore in the quarter ended March 2024 (Q4 FY24). Its stock closed 1.51 per cent up at Rs 55.95 per share on BSE.

 

Net interest income (NII) expanded 12.2 per cent to Rs 2,254 crore in Q1 FY25, compared to Rs 2,009 crore in the same quarter a year ago.

Sequentially, NII declined from Rs 2,187 crore in Q4 FY24.

Its net interest margin (NIM) improved to 3.09 per cent in Q1 FY25, compared to 2.86 per cent in Q1 FY24. Sequentially, NIM was up from 3.03 per cent in Q4 FY24, according to an analyst presentation.

In the post result virtual media meet, Ashwani Kumar, managing director and chief executive, UCO Bank said bank continues to maintain guidance for NIM to be around 3 per cent as pressure on deposit rate is still there.

This pressure is expected to continue till the time some rate cut is announced. Its cost of deposits rose to 4.79 per cent in Q1Fy25 from 4.61 per cent in Q1Fy24. However, they declined sequentially from 4.82 per cent in Q4Fy24.

Non-interest income rose 31.91 per cent Y-o-Y to Rs 835 crore. Sequentially, it fell by 25.77 per cent from Rs 1,125 crore in Q4 FY24.

The lender’s provisions for non-performing assets (NPAs) rose from Rs 389.3 crore in Q1FY24 to Rs 396.6 crore in Q1 FY25.

Advances expanded 17.64 per cent Y-o-Y to Rs 1.93 trillion in Q1FY24. Out of this, the retail book expanded by 21.84 per cent Y-o-Y to Rs 42,985 crore at the end of June 2024.

Total deposits increased 7.39 per cent Y-o-Y to Rs 2.68 trillion at the end of June 2024. The share of low-cost deposits — current account and saving accounts (CASA) — rose at 38.62 per cent at the end of June 2024, from 38.10 per cent a year ago, according to an analyst presentation.

Bank expects to grow the loan book by 12-14 per cent and deposits by 8-10 per cent in Fy25, Kumar added.

Asset quality profile improved with gross non-performing assets (NPAs) declining to 3.32 per cent in June 2024 from 4.48 per cent in June 2023. Net NPAs also declined to 0.78 per cent in June 2024 from 1.18 per cent a year ago.

The provision coverage ratio (PCR) including written-off accounts improved to 95.76 per cent in June 2023 from 94.88 per cent a year ago.

Capital adequacy stood at 17.09 per cent with Tier I of 14.75 per cent at the end of June 2024. The bank has approval to raise capital up to Rs 4,000 crore. It may visit the capital market to raise part of capital in the current quarter or next quarter after government approval, Kumar added.