In spite of the economic slowdown in the international markets and the consequent ripples in the domestic market, UCO Bank has posted improved operating performance during FY 09 compared to the previous year. The Bank showed a total business (INR 1698.90 billion) growth of 25.34% in FY 09 with the total advances (INR 696.69 billion) and deposits (INR 1002.21 billion) growing by 25.24% and 25.42% respectively.
The Banks total deposits stood at INR 1002.21 billion, as compared to INR 799.09 billion a year ago. In line with mid-sized public sector banks in India, the Bank is also mostly funded through term deposits. The term deposits of UCO Bank account for 75.88% of total deposits. Further, the Banks global advances grew by 25.24% to reach INR 696.69 billion during FY09 as against INR 556.26 billion during FY08. The Banks credit to deposit ratio has marginally decreased to 69.51% in FY09 as compared to 69.61% in FY 08.
The Banks asset quality has been gradually improving with better enforcement of credit culture and monitoring. As a result, the Banks gross NPAs had come down to 2.21% as on 31st March 2009 from 2.97% for the same period a year ago. The Banks net NPAs have shown a similar trend, which has declined to 1.18% in FY09 from 1.98% in FY08. The sustained improvement in the Banks asset quality is significant keeping in view the strong loan growth witnessed during the year.
The Bank has been consistently generating profit over the years. The Bank has posted growth in revenues and profits, with total income of INR 91.42 billion in FY09 as against INR 72.81 billion in FY 08, reflecting significant improvement in core banking operations, and fee based activities. The Bank is focusing on building healthy earning assets, which has contributed to improvement in profitability. The Banks operating and net profits increased to INR 12.02 billion (INR 9.54 billion in FY 08) and INR 5.58 billion (INR 4.12 billion) respectively during FY09 scaling new heights in profitability.
Even during the current downturn in the economy, the Bank has maintained its treasury operations reasonably well. During FY09, the total gross Investments of the Bank increased by 19.31 per cent. The total gross investments of the Bank as on 31.03.2009 stood at INR 293.85 billion.
In FY 09, the Banks CASA deposits stood at 24.11% (25.65% in FY08), which is significantly lower than its peers average of 30.78%. The Bank has recorded lower capital adequacy ratio 0f 9.75% under Basel I norms in FY 09, as against 10.09% in FY08, which is also significantly lower than its peers average of 12.49%. Similarly, the Banks Tier I capital stood at 5.05%, which is 358 bps lower than that of peers in FY 09.
Brickwork expects that the current unstable global economic conditions and the resultant effects on the Indian economy may put some pressure on the Banks asset quality and the earnings. However, with the consistently improving risk management practices, the efforts being made to bring about better efficiency and improve performance, and the Government of Indias expected support in improving Banks Capital Adequacy, Brickwork Ratings feels that the Bank will be in a better position to face the present challenging times and has assigned Positive Outlook for the Banks proposed issue.