United Bank of India (UBI) on Friday said it has put a ceiling on its lending rates at 14.25% a year. Chairman and managing director Bhaskar Sen announced this at the bank’s maiden annual general meeting, where shareholders approved a dividend of Rs 2 per equity share with a face value Rs 10.
UBI has earlier fixed its base rate at 8.25%. Now, with this ceiling in place, the bank would lend at an interest rate corridor of 600 basis points.
At the AGM, shareholders passed the bank’s plan to raise Rs 350 crore of Tier-I capital and Rs 250 crore of Tier-II capital in 2010-11. However, Mr Sen said the bank would enter the capital market only in the second half of the fiscal.
UBI would need Rs 700 crore of the capital to fund its credit growth, which is pegged at 23% YoY. Out of this, it would need Rs 540 crore of Tier-I capital and it has already received Rs 250 crore from the government. The capital adequacy ratio of the bank was 12.8% on March 31, 2010. At its maiden public issue, UBI raised Rs 330 crore.
UBI’ total business has crossed Rs 1.10 lakh as on March 2010 and it aims to reach Rs 1.40 lakh crore by March 31, 2011. Its advances rose 19.7% to Rs 42,756 crore with deposits rising by 25% to Rs 68,180 crore.
For 2009-10, the bank’ net profit rose 74.5% at Rs 322.36 crore against Rs 184.71 crore in the preceding fiscal. Operating profit grew 29.3% at Rs 875.85 crore (Rs 677.23 crore).
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