State-run UCO Bank on Saturday stated its net profit for the quarter ended June rose 24 per cent year-on-year to Rs 362 crore. This was the bank's highest-ever profit for the April-June period. During the quarter, interest income from advances rose and the bank kept a tight control on costs.
Net interest income, or the difference between interest income and interest expenditure, rose 29 per cent to Rs 1,043 crore. UCO Bank's net interest margin, however, fell by two basis points from a year ago, and by 27 basis points sequentially, to 2.44 per cent, as the rise in the cost of deposits outpaced the increase in the yield on advances.
“We started our balance sheet cleaning exercise about two years back. While the process is still on, the benefits are being reflected in our financial performance. We have done well in an otherwise tough economic environment, recording decent growth in our businesses,” said Chairman and Managing Director Arun Kaul.
The bank kept a tight leash on its operating expenses, which helped it reduce its cost to income ratio from 43.57 per cent to 38.85 per cent. The bank's asset quality, however, deteriorated, with about Rs 800 crore of fresh slippages recorded during the quarter. The bank's gross non-performing asset ratio rose by 38 basis points to 3.88 per cent, while the net bad loan ratio increased by 8 basis points to 2.23 per cent.
The bank restructured loans of about Rs 3,800 crore and its restructured loan portfolio stood at Rs 6,379 crore. "Our restructured pipeline is not very large. Also, slippages from our restructured portfolio have not been very high. Our loan recoveries have improved. We don't see any problem in our asset quality in the coming quarters," said Executive Director N R Badrinarayanan.
Advances increased 24 per cent year-on-year to Rs 1,19,163 crore, while deposits rose 21.5 per cent to Rs 1,55,010 crore. The growth in advances was driven by working capital finances and sanctioned project loans disbursed during the quarter. "The aim is to grow our advances and deposits 17-18 per cent this financial year. I will be happy if our net interest margin improves to three per cent," Kaul said.
The share of low-cost current account and savings account (Casa) deposits was 25.60 per cent. The bank aims to maintain the Casa ratio at the current level for rest of this year. At the end of the quarter, bulk deposits, including certificates of deposit, stood at about Rs 60,000 crore, or about 39 per cent of total deposits.