UCO Bank shares edge down, despite 81% surge in Q1 profit

The UCO Bank share price shed 1.2 percent in trade on July 31, even as the bank posted robust Q1 results. At 12:30pm, the stock was trading 1.91 percent lower at Rs 28.10 on the NSE.

The public sector lender on July 28 reported an 81 percent jump in net profit at Rs 223.48 crore for the June quarter of the current financial year from Rs 123.61 crore a year ago.

The Kolkata-based bank’s gross non-performing assets (GNPAs) declined to 4.48 percent from 7.42 percent over the last one year, while its net non-performing assets (NNPAs) fell to 1.18 percent from 2.49 percent. Net interest income (NII) increased by 21.78 percent to Rs.2008.80 crore in Q1FY24 as against Rs.1649.54 crore last year and net interest margin (NIM) improved to 2.86 percent from 2.74 percent, registering a growth of 12 bps.

Return on Assets (ROA) improved to 0.28 percent – an improvement of 11 bps year-on-year. Total Business grew by 16.06 percent on-year to Rs 4,13,972 crore from Rs 3,56,677 crore. Total deposits went up by 10.81 percent to Rs 2,49,694 crore from Rs 2,25,328 crore.

Also Read: ICICI Bank’s Q1 numbers drive stock to all-time highs; analysts weigh in

The bank’s capital adequacy ratio (CRAR) improved to 16.85 percent from 14.13 percent in the last one year, with Tier 1 ratio of 14.16 percent as against 11.29 percent registered an improvement of 272 bps in capital adequacy ratio and and 287 bps in Tier 1.

Management Commentary

“UCO Banks slippage ratio has come down and is expected to remain in the range of 1-1.25 percent by FY24. Additional provision has been done of Rs 530 crores against restructuring book,” Ashwani Kumar, MD and CEO of UCO Bank, told CNBC-TV18.

Credit deposit ratio has improved to 65 percent from 59 percent on year-on-year basis. “We have very good scope to raise credit deposit ratio to 75 percent without going for deposits in a big way. Focus now is on growing CASA, endeavor is to it to 40 percent. Currently we have excess SLR of 8 percent in the balance sheet.” The intention of the bank is to keep the net interest margin (NIM) in the range of 2.9-3 percent.

“Corporate portfolio is 39 percent, retail, agriculture and MSME constitutes the remaining 61 percent of the book. Housing, vehicle and personal loans are the focus areas of the bank corporates aren’t giving good yields hence corporate advances are low and slippages out of restructured book are 10 percent,” he said.

Stock Performance

UCO Bank has lost 5.23 percent of its value over the last six months. The stock has underperformed the benchmark Nifty Bank index by a considerable margin as the benchmark index has given a return of 12.06 percent over the same duration.

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