Dragged down by higher provisioning on account of non-performing assets, UCO Bank posted a 43 per cent drop in net profit at Rs 119 crore for the quarter ended September 30, against Rs 208 crore during the corresponding quarter last year.
NPA provision increased to Rs 430 crore (Rs 60 crore) during the quarter under review.
The bank reported 148 per cent rise in fresh slippages during the quarter at Rs 678 crore (Rs 273 crore).
Out the total slippages last quarter, about Rs 141 crore was on account of non-recovery from agriculture debt relief scheme, according to the bank's Chairman and Managing Director, Mr Arun Kaul.
“The drop in net profit during this quarter has been mainly on account of higher provisioning to the tune of Rs 580 crore (Rs 141 crore). However, despite a drop in net profit our net interest income, operating profit and net interest margin has posted a good growth,” Mr Kaul said while announcing the bank's performance during the quarter here on Friday. The net NPA was at 1.18 per cent (1.01 per cent).
Due to a reduction in the cost of funds and high cost deposits, the bank's net interest margin improved to 3.51 per cent (1.99 per cent). “Our NIM has improved due to the shedding of high cost bulk deposits and the lowering in cost of deposits. Moving forward, there could be some pressure on NIM as there is a pressure on liquidity, but we are hopeful of maintaining it at about three per cent,” he said.
The bank's net interest income increased by 91 per cent at Rs 1,001 crore (Rs 525 crore). The treasury income reduced to Rs 15 crore (Rs 65 crore) during the quarter under review.
The bank's provision coverage ratio was at 62 per cent as on September 2010, and the bank expects to reach 70 per cent mark, as stipulated by the RBI, by March 2011, he said.
UCO Bank, Mr Kaul said, might not go for the follow-on-public offer immediately, as its capital adequacy ratio was comfortable at 13.60 per cent.
The bank's Tier I capital was 7.82 per cent as on September 2010. “We recently received Rs 673 crore from the government and our CAR is also comfortable, so may not go for the FPO now,” he said.
The bank had plans to raise about Rs 400 crore through an FPO by issuing about six crore equity shares.
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