High non-performing assets (NPA) dragged UCO Bank's net profit by 42.78 per cent in the second quarter of the present financial year to Rs 119 crore, against Rs 208 crore in the same period last year.
The public sector bank reported fresh slippages of Rs 678 crore in the last quarter, against Rs 273 crore in the quarter ended September 2009, a rise of about 148 per cent. Out the total slippages last quarter, about Rs 141 crore was on account of non-recovery from agriculture debt relief scheme.
The bank's net non performing asset in the last quarter was Rs 1,005 crore, against Rs 710 crore in the same period last year.
The treasury income of the bank reduced to Rs 15 crore in the last quarter, against Rs 65 crore in the corresponding period of the last year.
“The decline in net profit in Q2 was on account of large provisions provided by the bank amounting to Rs 586 crore in Q2, against Rs 160 crore in in Q2 of last fiscal. However, our operating profit, net interest margin and net interest income has improved a lot,” said Arun Kaul, chairman and managing director, UCO Bank at a press meet here today.
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 in the quarter under consideration, against 1.99 per cent in the same period last year.
UCO Bank's provision coverage ratio was 62 per cent as on September 2010, and the bank expect to reach 70 per cent mark, as stipulated by the RBI, by March 2011.
The bank's net interest income increased by 91.05 per cent in Q2, to Rs 1,003 crore.
FPO plans being re-examined
UCO Bank is re-examining the option of going for a follow-on-public offer, as its capital adequacy ratio improved to 13.60 per cent in the last quarter, said Kaul.
The bank's tier I CAR was 7.82 per cent as on September 2010.
“We recently received from the government Rs 673 crore, and our CAR is also comfortable, so may not go for it now,” said Kaul.
Recently, the government approved the bank's proposal for the FPO.
Earlier, SK Goel, the former chairman and managing director of UCO Bank had said that it planned to issue about six crore equity shares to raise about Rs 400 crore.
