It is an immense pleasure to welcome you all to the 16th Annual General Meeting of theBank and presenting the Annual Report and financial statement of your Bank for thefinancial year 2018-19. I take this opportunity to extend sincere gratitude to all theshareholders for their persistent support for overall development of the Bank.
Before I proceed to present the performance highlights of the Bank let me dwell uponthe economic scenario.
Despite Global economic activity and trade have been shredding momentum during the year2018-19 on account of elevated trade tensions tighter financial conditions and slow downin China some of the forward looking surveys conducted by Reserve Bank of India indicatethat consumer confidence has improved and business expectations remain optimistic inIndian economy. Moreoveraggregate flow of funds to commercial sector from banks and nonbanks remains robust led by strong growth in bank credit.
The latest World Bank report indicates that Indian economy is going through a phase ofrevival. On the basis of GDP India is now the sixth biggest economy. India is widelybelieved to remain world's fastest growing economy in the medium to long term. As per theprojections by IMF and World Bank in the medium term the annual growth is projected to bearound 7.5 percent. The investment activity has accelerated during the year 2018-19 and isexpected to strengthen further as the benefits of recent structural reforms begun tomaterialize. The head line CPI inflation remained below the target of 4 percent during thesecond half of FY 2018-19 and the central government remains committed to the fiscaltargets.
During the financial year 2018-19 Indian Banking system was on the cusp oftransformation and has begun to show signs of improvement aided by number of structuralmeasures initiated by the Central Government for growth of formal economy and regulatoryapproach of the Reserve Bank of India in ensuring the Banking system to tide away thetransitory difficult phase. Based on performance and backed by Recapitalization of PublicSector Banks by central government few Banks came out of Prompt Corrective Action framework which enabled the Banks to ease lending constraints and to contribute to the growthof economy.
The newly introducedresolution frame work aided with Insolvency and Bankruptcy Code(IBC) created an environment in which maximum value can be realized from troubled assetsbolstered by early identification of incipient stress. The shift of power in favour ofcreditors helped in speedier and market driven resolution process. These measures arehelping the Banks in cleaning up their balance sheets and aiding a paradigm shift inextant credit culture and discipline. The progress of IBC framework is encouraging andresulting in better recovery as compared to earlier resolution mechanism.
A snap shot of Bank's financial performance during the financial year 2018-19 is asunder:
Global business of the Bank increased to `317480 crore registering a y-o-y growthrate of 3.81%. The domestic business of the Bank increased to `304017 Crore registeringa growth rate of 8.28%. The domestic deposits increased to `192278 Crore registering agrowth rate of 11.78% while domestic advances increased to `111738 Crore registering agrowth rate of 2.75%. Domestic CASA deposits of the Bank increased to `85559 Croreregistering ay-o-y growth of 33.53%. Bank has taken several measures to attract low costdeposits by developing digital infrastructure to offervarious solutions like mobilebanking net banking e-wallets and other technology driven instruments for cateringcustomer needs.
The operating profit of the Bank for the FY 2018-19 is `2760 crore against Rs.1334Crore during FY 2017-18 reflecting a growth of 106.88% with increase in interest incomeand decline in expenses.
The net loss of the Bank for FY 2018-19 reduced to `4321 crore as compared to loss of`4436 crore during FY 2017-18. The net loss is mainly on account of higher provisioningrequirements on non performing assets. GNPA percentage increased marginally to 25.00% inFY 2018-19 from 24.64% in
FY 2017-18. Net NPA percentage decreased to 9.72% in FY 2018-19 from 13.10% in previousyear. The provision coverage ratio increased to 74.93% as on 31.03.2019 from 61.38% as on31.03.2018. Bank has shown significant performance in recovery as Cash recovery andupgradation for the year 2018-19 has shown Y-o-Y growth at 24% from `4290 Crore in March2018 to `5324 Crore in March 2019. Cash recovery during the year has increased by 78% overthe previous year.
The Common Equity Tier I (CET I) was at 8.64% as on 31.03.2019 and Capital AdequacyRatio (CRAR) under BASEL III remained at 10.70% as on 31st March 2019 slightly lower thanregulatory requirement of 10.875%. The capital adequacy was strengthened with support fromcentral government through aggregate capital infusion of `6406 crore during FY 2018-19.
During the FY 2018-19 Bank has come out with offer of 20 crore equity shares at `14.25per share at a discount to market price under UCO Bank Employee Share Purchase Scheme toencourage employees in becoming shareholders of the Bank. Employees of the Bank evincedhuge interest to contribute towards capital of the Bank. Bank has received Rs.266.68 Crorefrom the employees towards share application money. Shares were allotted after the end ofFY 2019 on 23.04.2019 subsequent to receipt of all necessary approvals.
Bank has received following awards during the year 2018-19 for the its achievement inthese areas:
NPCIs Special Award under National Payments Excellence Awards - 2017 in May 2018.
3rd Prize on IDRBT Banking Technology Innovation Contest (IBTC) -2018 for UCO SecureApp in April 2018.
3rd Prize on IDRBT Banking Application contest 2017 for UCO HRMS plus.
Infosys Finacle Client Innovation Award 2017 - Winner in Segment Innovation in ProjectManagement under Mid size Bank.
With addressing of recognition issue nonperforming assets of the Bank have been at itspeak. Mounting provisioning requirements interest reversals led the Bank to postconsistent negative return on assets and subjected the bank to bring under RBI frameworkof Prompt Corrective Action.
Bank made SANKALP-2020 to come out of Prompt Corrective Action frame work by FY 2020through strategies for enhancement of low cost deposit base strengthening Retail &MSME business increasing agricultural business strengthening of recovery and creditmonitoring.
The major focus area for the FY 2020 is Recovery of stressed assets. Bank hasimprovised compromise settlement schemes for speedy recovery and geared up recoverymechanism at all levels to initiate recovery measures under SARFAESI Act DRTsLokAdalats NCLT Country wide mega recovery camps Road shows MAO campaigns declarationof willful defaulters etc.
Few of other initiatives would include setting up of marketing department at HeadOffice strengthening retail loan hubs and SME loan hubs digital deepening and use oftechnology in redesigning the processes to strengthen controls and providing greatertransparency.
With the improved macroeconomic environment and expected improvement in stress assetsof the Bank we have taken a SANKALP to bring back the Bank to profitable position.
I would like to acknowledge and thank all the members of the Board for their valuedsupport and guidance to the management in all the endeavors. I would also acknowledge thehard work dedication and commitment shown by all the employees of the Bank.
I would look forward for continued support from all the stakeholders.
(A. K. Goel) Managing Director & Chief Executive Officer