UCO Bank Q2 results: Profit surges 7-fold to Rs 205 crore

State-owned UCO Bank reported a near seven-fold jump in net profit for the September quarter, riding on higher interest income and write-back of provisions made earlier.

Its net profit stood at Rs 205.4 crore as against Rs 30.1 crore in the year-ago period.

Net interest income (NIM), a key parameter of profitability, remained flat at 2.79% for the quarter under review, despite lower lending rates.

“We expect NIM to be at 3% or more in the near future,” managing director AK Goel said. He said the lower cost of funds, better collection efficiency from stressed accounts as well as higher credit growth would help in the improvement of NIM.

We expect advances to grow around 10% for the full year, Goel added.

The Kolkata-based lender’s operating profit rose 24% at Rs Rs 1,334 crore as compared with Rs 1,076 crore in the year-ago quarter. Net interest income rose about 15% at Rs 1,598 crore from Rs 1,393 crore over the same period last year. Other income grew 31.2% YoY to Rs 936 crore

Goel said the bank made an additional provision of Rs 250 crore towards Covid-19 related risk on asset quality, taking the total additional Covid-related provision to Rs 750 crore. Total bad loan provisions rose to Rs 1,595 crore in the September quarter from Rs 1,032 crore in the year-ago period.

The bank’s total provision, however, came down to Rs 1,019 crore during the period from Rs 1,301 crore on account of write-backs of provisions made earlier. The bank has recovered Rs 550 crore from written-off accounts, taking the total recovery and upgradation to Rs 1,876 crore during the quarter.

UCO’s asset quality improved with the gross non-performing assets (NPA) ratio falling to 8.98% at the end of September from 11.62% a year back. Net NPA stood at 3.37%, down from 3.63%. Its provision coverage ratio rose to 90% from 89.82% over the same period.

Its total advances grew 5.7% to Rs 1.22 lakh crore with retail, agriculture and MSME sectors now contributing about 64% to it.

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