UCO Bank’s Q1 credit growth likely in the range of 12-14%, says MD and CEO Ashwani Kumar
State-run UCO Bank’s credit growth during the first quarter this fiscal may be in the range of 12-14 per cent year-on-year, its Managing Director and Chief Executive Officer Ashwani Kumar said on Monday.
The Kolkata-based bank is witnessing “a small” increase in its cost of funds during the first quarter compared to that of the fourth quarter of the last financial year.
“The momentum is good in terms of credit growth in the first quarter. It will most likely be in line with the earlier quarter. In the retail segment, there is growths in home loan, vehicle loan and gold loan sectors. In MSME, there is demand in most of the sector. In agriculture, there is demands for SHG loans (self-help groups) and agri gold loans,” Kumar told businessline.
“In the corporate segment, there are credit demands in power, tea, textile, renewable energy and infrastructure sectors,” Kumar said.
MCLR hike
The lender’s Asset Liability Management Committee (ALCO) reviewed the benchmark rates earlier this month and increased its MCLR by 5 basis points for two tenures. The one-year MCLR has risen to 8.90 per cent, while the three-month MCLR rate has increased to 8.50 per cent.
“We have seen a slight increase in our cost of funds. In the March quarter (Q4FY24), our cost of funds had come down. But when we talk about the trends, as deposits rates are still high, the cost of funds is little bit higher in the June quarter this fiscal compared to March quarter last fiscal,” Kumar said.
The lender is planning to take all possible steps for recovery and upgradation of bad loans in order to bring down the amount of gross non-performing assets (NPA) to below ₹6,000 crore by this fiscal-end. “The recovery could be through NCLT and Sarfaesi routes or through selling bad loans to ARCs (Asset Reconstruction Companies). Whatever means will be required to bring down the gross NPA amount, we will be taking those,” the MD said.
During the ongoing first quarter, the bank did not sell any bad loans to ARCs.
Gross NPA dips
During the fourth quarter last fiscal, its gross NPA, in absolute terms, fell 16.35 per cent year-on-year to ₹6,463.30 crore from ₹7,726.46 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. “Our internal target is recovery and upgradation should be more than fresh slippages in every quarter. In Q1FY25, we are in line with this target,” Kumar said.
UCO Bank has opened six special rupee vostro accounts with Russian and Belarusian banks so far. “Eligible transactions are getting underway in these accounts as per the RBI guidelines,” the MD added.
The bank’s board earlier 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.
The lender will be taking shareholders’ approval for the equity capital raising plan for 2024-25 in the 21st Annual General Meeting, which will be held on June 18.