State-owned UCO Bank has dropped its plan of raising capital through a follow-on public offer (FPO) in this fiscal, saying it's adequately capitalised.
"There is no need for an FPO because the capital requirements have been met with funds from the government...We will not go for an FPO in the current financial year," the bank's Chairman and Managing Director Arun Kaul told PTI here.
The Kolkata-headquartered bank had drawn-up plans of raising up to Rs 400 crore through an FPO, which would have seen the government diluting its stake from 70 per cent to 58.6 per cent.
"The government has already given us non-equity Tier-I capital that is perpetual debt in preference capital and it has strengthened our Tier-I capital," Kaul said, adding that the bank's capital adequacy stands at a comfortable 13.60 per cent currently.
The bank has gone through the cycle of bulk deposits and credit-propelled growth and will now focus on the retail and mid-corporate segments to grow, Kaul said, adding it is targetting a 20 per cent deposit and credit growth current fiscal.
The focus will be on growing the cheaper CASA (Current And Savings Accounts) deposits to the 27-30 per cent levels in the next 6-12 months from the current 25 per cent through a greater stress on customer acquisition, Kaul said.
More From This Section
The bank's September quarter net profits were down 42 per cent due to concerns about the loan portfolio which led to higher provisioning, Kaul said. There will be 'no surprises' on the provisioning front going forward though there will be some pressure on margins as rates are going up, he said.
Kaul said he expects to bring down the bank's gross non-performing assets to the 2 per cent level from the 2.39 per cent as on September 30, 2010, while net interest margins may slip to 3 per cent from the current 3.51 per cent.
UCO Bank plans to hire 2,000 people this fiscal and has also drawn up plans to add 800 new branches to its existing 2,158 in the next two years, Kaul said.
The bank's exposure to commercial real estate is around 5 per cent of the loan-book and performing well, while it has not lent any money to the microfinance sector at all, he said.