UCO Bank scraps ‘sweets for NPA’ plan: CEO Kumar clarifies intent was to ‘meet and greet’

The bank has withdrawn a circular which had earlier asked branch officials to distribute sweets to top ten NPA accounts holders. Kindly explain.

The intent behind that was to meet and greet. Distribution of sweets was not the intent. When I got to know of it, we took the decision to withdraw the circular.

The bank has received approval to join the Central Bank Digital Currency (CBDC). What is the bank’s plan of action on that front?

We received approval from the RBI to onboard UCO Bank for CBDC two days ago. We are in talks with NPCI for further work. However, we believe that few more works are needed to be done on the front.

The bank’s net profit has declined by over 20 per cent in Q2. What is the reason?

The bank’s net profit for the quarter ended September declined 20.4 per cent year-on-year (Y-o-Y) to Rs 402 crore on a decrease in non-interest income and a rise in operating expenses. Sequentially, the bank’s profit went up 79.7 per cent in Q2, from Rs 223 crore in the quarter ended June. Its net interest income expanded 8.3 per cent to Rs 1,917 crore in Q2, compared to Rs 1,770 crore in the same quarter a year ago. Sequentially, NII declined 4.6 per cent from Rs 2,009 crore reported in Q1.

The net profit of the bank for H1 was marginally down. What was the reason?

Net profit for the half year stood at Rs 625 crore as against Rs 628 crore for the for the same period in the preceding year on account of higher provisioning. However, net profit for the second quarter stood at Rs 402 crore as against Rs 223 crore for the year-ago period thereby registering a growth by 79.74 per cent. Similarly, Net Interest Margin (NIM)-Domestic for H1 stood at 3.12 per cent as against 2.91 per cent for the year-ago period, registering an improvement of 21 bps.

What is the asset quality of the bank at present?

Gross NPA improved to 4.14 per cent as against 6.58 per cent a year ago, registering an improvement of 244 bps. Net NPA improved to 1.11 per cent from 1.99 per cent in the year-ago period, registering an improvement of 88 bps. Provision Coverage Ratio improved to 95.07 per cent as against 92.90 per cent as on a year ago, registering an improvement of 217 bps.

Kindly explain the financial result of the bank for Q2.

Our gross NPA reduced by 244 bps to 4.14 per cent in the second quarter of the current fiscal, ending September 30, whereas Net NPA reduced by 88 bps to 1.11 per cent during the period under review.

Total business grew by 10.56 per cent to Rs 417145 crore, wherein gross advances were up by 17.99 per cents to Rs 167734 crore and Total Deposits grown by 6.07 per cent to Rs 249411 crore.

How was the bank’s performance on the other parameters during the period?

Total business grew by 10.56 per cent to Rs 4,17,145 crore from Rs 3,77,305 crore in the year-ago period. Total Deposits up by 6.07 per cent to Rs 2,49,411 crore from Rs 2,35,149 crore a year ago. Similarly, gross advances grew 17.99 per cent to Rs 1,67,734 crore as against Rs.1,42,156 crore in the year-ago period.

Our RAM (Retail, Agri & MSME) business currently stands at Rs 90,046 crore as against Rs76,566 crorea year ago, registering an improvement of 17.61 per cent during the period.

Retail advances stood at Rs 36,362 crore (Rs 31,055 crore), registering a growth of 17.09 per cent, fuelled by Home loan and Vehicle loan portfolio which registered a growth of 21.24 per cent and 27.49 per cent respectively. As of now, our agriculture advances stand at Rs 22,985 crore from Rs 20,105 crore a year ago, showing a growth of 14.32 per cent. Advances to MSME sector stood at Rs 30,699 crore from Rs 25,406 crorea year ago, showing a growth of 20.83 per cent.

What is the status on Capital adequacy?

Capital Adequacy Ratio (CRAR) improved to 16.83 per cent as compared to 14.02 per cent a year ago, with Tier 1 ratio of 14.19 per cent, registering an improvement of 281 bps and 294 bps in CRAR and Tier 1 respectively.

Kindly throw some light on branch network.

Bank has a network of 3213 domestic branches and 2 overseas branches at Hongkong and Singapore and 1 Representative office in Iran. Out of the total branches, Bank has 61.78 per cent or 1985 branches in rural and semi-urban areas. Bank has 2472 ATMs and 8747 BC Points making the total number of 14435 touch points.

Treasury income also came down in the period. Why?

Treasury income came down to Rs 57 crore in this quarter from Rs 163 crore in Q2 as there was mark-to-market loss due to increase in yield. The bank currently has an excess SLR holding of around Rs 23,400 crore, and utilising a part of it to support credit growth is a favored route instead of aggressively pricing deposits.