UCO Bank’s Q2 FY26 earnings call highlighted strong performance with business growth of 13.23% and deposit growth of 10.85%. The bank reported a 12.64% increase in Operating Profit and improved asset quality, with Gross NPA reducing to 2.56%. Management anticipates continued improvement and is focusing on digital transformation and strategic lending opportunities to drive future growth.
Financial Performance Overview
UCO Bank reported a strong Q2 FY26, marked by significant growth across key business areas. The bank’s overall business grew by 13.23%, driven by deposit growth of 10.85% and credit growth of 16.56%. CASA Deposits increased by 9.53%, with Savings growth at 7.50% and Current deposit growth at 23.94%. CASA was maintained at 38.11%.
Key Profitability Metrics
The bank’s Operating Profit for the quarter stood at Rs. 1,613 crore, reflecting a growth of 12.64%. Net Profit was reported at Rs. 620 crores, a 3% year-over-year increase. This performance was underpinned by a 10.08% growth in Net Interest Income and a strong increase in fee-based income.
Asset Quality Improvements
UCO Bank saw substantial improvements in asset quality. Gross NPA reduced by 62 bps to 2.56%, and Net NPA decreased by 30 bps to 0.43%. The bank’s PCR improved to 96.99%. The total recovery and upgradation for the quarter amounted to Rs. 792 crores.
Strategic Initiatives and Outlook
UCO Bank is focused on digital transformation through ‘Project Parivartan,’ with significant progress in digitizing various processes. Mobile banking users have increased substantially, and the bank is enhancing its digital offerings. The bank is also expanding its branch network and exploring new lending opportunities, particularly in green financing and emerging sectors. The management team anticipates continued positive performance and is committed to sustained growth.
Lending and Advances
RAM (Retail, Agri, MSME) growth grew by 22.87%, with Retail growth at 25.4%. Growth was supported by housing loan (18.94%), vehicle loan (72.87%), and agriculture (17.28%) growth. The RAM percentage of total advances increased to 65.23%.
Net Interest Margin (NIM)
The global NIM stood at 2.90%, and domestic NIM at 3.08%, calculated excluding a one-time interest income of Rs. 107 crores. Including this income would improve the global and domestic NIM by over 15 bps.
Capital Adequacy and Other Ratios
The bank’s capital adequacy ratio stood at 17.89%, with Tier 1 capital at 15.90%. The CD ratio improved to 75.47%. The bank is committed to maintaining strong capital levels and efficient operations.
Slippage Ratio
The slippage ratio for the quarter was 0.26%, annualized to 1.05%, within the guidance of 1% to 1.25%. Slippages were mainly from agriculture, totaling Rs. 238 crores, due to KCC portfolio dynamics.
Source: BSE
