Public sector lender, UCO Bank, is mulling a follow-on public offer (FPO), which will reduce government holding in the bank from 64 per cent at present to 52 per cent.
The bank might raise about Rs 500- 600 crore in the fiscal, depending upon the market conditions, said S K Goel, chairman and managing director, UCO Bank, on the sidelines of a Ficci Banking Conclave here on Monday.
The bank would approach the government for the FPO issue in the third quarter of the fiscal, after the capital restructuring exercise was over.
"We have a headroom to raise Rs 100 crore base equity and at a premium of Rs 40-50 we can raise close to Rs 500-600 crore this year,” said Goel.
As a part of capital restructuring, in March 2009 the bank received Rs 450 crore , out of Rs 1,200 crore from the government as tier I capital. The bank is expected to get the remaining Rs 750 crore by next month through preferential allotment of shares.
In December 2008, UCO Bank restructured the bank's equity capital by converting Rs 250 crore out of the total equity capital of Rs 799.36 crore into perpetual non-cumulative preference shares (PNCPS).
The capital restructuring led to the government stake coming down from 74.98 per cent to 63.59 per cent.
After the government infuses Rs 750 crore in the bank, it will have a headroom of raising about Rs 1,600 crore, as tierI and tier II capital.
The capital adequacy of the bank at present is 11.95 per cent, which will go beyond 12 per cent after the capital infusion.
The bank expects about 25 per cent growth in both deposits and credit this fiscal.
UCO Bank was expected to come out with the FPO last fiscal, but had put it on hold for some time due to the fall in stock prices earlier this year.
To reduce Interest Rate on deposits UCO Bank is planning to cut interest rate on deposits by 50-100 basis points across different maturities by next month.
The cut in deposit rates was necessary on account of falling interest on lending rate, as it was putting pressure on the net interest margin (NIM) of the bank, said Goel.
The bank expects a NIM of 2.25 per cent in the fiscal, while in the present quarter the NIM was expected to be 1.95 per cent, against 1.75 per cent in the quarter ended March 2009, and 1.98 per cent in the last fiscal.
In the current quarter, the credit growth had been lower than usual, said Goel.
"The credit growth in the present quarter is not much in the present quarter. It could be about five per cent more than in the March quarter. On a year-on-year basis it could be 17-18 per cent," said Goel.
However, credit offtake was picking up in sectors like infrastructure, automobile, SMEs, cement steel and real estate
The bank expected about 15-20 per cent increase in net profit in the first quarter of the present fiscal, mainly driven by good treasury income, non-interest income and recovery, said Goel
The bank expected a treasury income of about Rs 105 crore in the present quarter, against Rs 65 crore in the same period last fiscal, added Goel.
UCO Bank had earlier decided to cut prime-lending rate by 50 basis points effective June 27.
