BANKING
| UCO Bank's net profit falls 55 percent Thu, 08 Nov 2012 00:53:00 +0530 |
| Business Standard Economy Policy News UCO Bank’s net profit for the quarter ended September 30 halved from a year ago to Rs 103 crore, as non-performing assets (NPA) mounted after its loans to Sterling Biotech turned bad. Slow growth in net interest income — the difference between interest income and interest expense — and erosion in margin also contributed to the decline in profit after tax. “There was slippage of Rs 1,500 crore, with one group alone responsible for Rs 820 crore NPA,” Arun Kaul, chairman and managing director of UCO Bank, told reporters in his post-earnings comments. He declined to name the company However, senior executives confirmed the account represented loans to Sterling Biotech, which had borrowed Rs 5,000-6,000 crore from a group of banks. They, however, said efforts were made to recover the money from Sterling Biotech and the account might be upgraded in the current quarter, resulting in provision write-back. Provisions for NPAs nearly doubled from a year ago to Rs 435 crore, as the gross bad loan ratio deteriorated to 4.88 per cent from 3.64 per cent a year ago. Net NPA ratio increased 83 basis points (bps) to 2.94 per cent. The bank restructured Rs 900-crore of loans. Its restructured loan portfolio was six per cent of its advances at the end of September. NII was almost flat growing 0.3 per cent year-on-year, to Rs 1,013 crore. Net interest margin narrowed 60 bps to 2.24 per cent in July-September quarter. Advances increased 24 per cent, while deposits expanded 23.8 per cent. Kaul said the bank aimed to grow its advances and deposits 16-17 per cent in the current financial year. UCO Bank closed the quarter with a capital adequacy ratio of 12.27 per cent. It had requested the government to provide Rs 1,500 crore to strengthen its capital base. |
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