UCO Bank has no requirement for raising fresh capital this fiscal, says MD Ashwani Kumar
State-run lender UCO Bank has no requirement for raising fresh capital for business growth this fiscal, but it may approach the government for a QIP or other capital-raising options next fiscal.
“If you look at our CRAR and adding back the profitability of nine months, our CRAR is well comfortable at 16.94 per cent even after considering the growth we have within the nine months. So far, there is no requirement of capital for the growth. But yes, government shareholding (in the banks) is very high. That is the reason we have taken the approval (for raising capital). But during this quarter, we don’t have any plans,” UCO Bank Managing Director and Chief Executive Officer Ashwani Kumar said during a post earning analysts and investors meet.
“In the next year we will go to the board again for approval of the capital raising plan, and we may approach the government also may be for QIP or other options,” Kumar said.
Capital adequacy
The bank’s capital adequacy ratio (CRAR) improved by 169 basis points to 16.01 per cent as on December 31, 2023 wherein Tier I capital ratio improved by 196 bps to 13.53 per cent during the period on a year-on-year basis.
Notably, the government’s shareholding in the Kolkata-based bank stood at 95.39 per cent at the end of the third quarter this fiscal.
The bank on Wednesday reported around 23 per cent year-on-year decline in its net profit at ₹502.83 crore for the third quarter this fiscal due to around ₹277 crore provisioning towards wage revision arrears.
The lender had posted a net profit of ₹652.97 crore in the third quarter last fiscal. The net profit witnessed a 25.18 per cent increase on a quarter-on-quarter basis during the period under review from ₹401.67 crore in the second quarter of this fiscal.
The additional provisioning towards wage revision dragged down the bank’s operating profit by 17.34 per cent y-o-y to ₹1,119.14 crore in Q3FY24 from ₹1,353.91 crore in Q3FY23.
During the third quarter, its gross advances increased by 18.63 per cent y-o-y, while total deposits grew by 5.38 per cent. The lender is looking at a credit growth of around 12-13 per cent for this fiscal.