UCO Bank aims to bring down gross NPA to below ₹6,000 crore by fiscal-end

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State-run UCO Bank is planning to bring down the amount of gross non-performing assets (NPA) to below ₹6,000 crore by this fiscal-end from ₹6,463.30 crore at the end of the last fiscal.

“Recovery and upgradation will ensure that the gross NPA will come down further. We expect that it would be below ₹6,000 crore at the end of this current fiscal as per the current trend,” UCO Bank Managing Director and Chief Executive Officer Ashwani Kumar said on Tuesday.

During the fourth quarter last fiscal, the Kolkata-based bank’s gross NPA, in absolute terms, fell 16.35 per cent year-on-year from 7726.46 crore in the corresponding period previous fiscal. Gross NPA ratio for Q4FY24 also decreased 132 basis points y-o-y at 3.46 per cent from 4.78 per cent in Q4FY23.

“We will try to further decrease the gross NPA ratio during this fiscal,” Kumar said.

The bank on Monday reported a 9.5 per cent year-on-year fall in its standalone net profit at ₹525.77 crore for the fourth quarter last fiscal as operating profit declined during the period. It had posted a net profit of ₹581.24 crore for the fourth quarter of FY23.

Operating profit for Q4FY24 stood at ₹1,272.87 crore against ₹1,357.05 crore for Q4FY23.

Higher provisioning

“The decline in operating profit on a year-on-year basis was basically because of the higher provisioning for the pension and gratuity in view of the recent wage revision approved by the Government. Because of that there is an increase in operating expenditure, and as a result the operating profit on the year-on-year basis fell,” the MD pointed out.

The bank is planning to invest around ₹1,000 crore in this financial year to bolster its IT infrastructure and modernise IT systems related to treasury operations. In the last financial year, it had spent around ₹700 crore for the IT infrastructure.

Notably, certain accounts holders of the bank in November last year had received a total of around ₹820 crore “erroneous credits” via Immediate Payment Service (IMPS). Certain transactions initiated by accounts holders of other banks had resulted in credit to the account holders of Uco Bank without actual receipt of money from these banks during November 10-13, 2023 due to an internal technical issue.

Plans to reduce stake

Kumar said the bank is also planning to reduce the government’s stake in it to 75 per cent this fiscal from the current 95.39 per cent to comply with the minimum public shareholding norms set by capital markets regulator SEBI.

“Our bank does not need equity for growth. However, we aim to reduce the government’s stake to 75 per cent to meet the regulations. The bank will explore different options available at the time,” he added.

Uco Bank’s board has approved a capital raising plan of around 400 crore shares of face value ₹10 each through various modes like QIP, FPO etc, and in multiple tranches during this fiscal.