"Inspite of economic scenario, we are confident to reach a net profit of Rs 750 crore in the current financial year," said SK Goel, Chairman and Managing Director, UCO Bank.
The bank reported a net profit of Rs 412.16 crore in FY08.
The bank is stressing at recovering bad assets to maintain its profit margins in the first quarter.
"The first quarter has been tough on the account of the prevailing economic and political conditions. With the interest rate rising, the credit growth has been slower, but we have been stressing on the recovery of bad debts to counter any hit on the bottomline," said Goel.
The bank recovered Rs 180 core during the the first three months of the fiscal.Speaking at the FICCI Banking Conclave 2008, he said the bank has provisioned for Rs 150 crore for mark to market losses in the first quarter of the current fiscal.
"There would be some impact on the profit on the account of the provisioning, but our recovery has been very good during the quarter. Out of the total recovered amount, Rs 20 crore came from the written off accounts which would directly go to the profit book, and the rest of the amount will lead to a decrease in provisioning on NPA," Goel explained.
In the corresponding quarter last year the bank reported a net profit of Rs 132.87 crore. The Kolkata-based public sector bank has set a total business target of Rs 1,65,000 crore in FY09.
Meanwhile, UCO Bank's financial services company will be operational by September this year with an initial capital of Rs 25 crore. The bank from on would concentrate only on the core banking business and accordingly we are setting up the subsidiary.
"Mutual fund or insurance selling are specialised activities which requires relevant expertise and this can be met only through a separate subsidiary," he added.
The bank will have a 49 per cent stake in its financial services subsidiary, while 26 per cent would be held by a foreign partner and the remaining 25 per cent will be with domestic partners, typically corporate houses. UCO Bank has appointed Ernst & Young as a consultant to help in scouting for the foreign partner.
It will work in the areas of non-bank financial activities, loan syndication, insurance and mutual fund sales.
