State-run UCO Bank on Friday said it expects its operating profit for this financial year to rise at least 15% by shoring up its CASA deposits and controlling the cost-to-income ratio.
“Our target is to grow operating profit by a minimum 15% year-on-year for the current financial year. The bank’s net profit would increase automatically if its operating profit increases. Provisions play a big role in determining net profit,” managing director and chief executive officer Ashwani Kumar told reporters on the sidelines of an event organised by industry body MCCI here.
Backed by a three-fold y-o-y increase in its operating profit, the Kolkata-based lender reported an 81% jump in its net profit to Rs 223.48 crore for the first quarter this fiscal. During the previous financial year, its operating profit had declined 9.5% to Rs 4,340.67 crore.
Kumar said the bank was planning to increase its operating profit by increasing incomes and reducing costs. “A growth in the bank’s operating profit would ensure better operational efficiency. We are targeting our cost-to-income ratio. We need to control our costs to improve operating profit. We will also need to increase other income (non-interest income),” the MD said, adding the bank is trying to achieve a CASA ratio of 40% at the earliest. A high CASA ratio reflects the bank’s ability to raise money with low costs.
Uco Bank has started ‘tab banking’ as a pilot project for opening accounts instantly. It has set a target of launching the tab banking facilities at about 1,000 branches by next month, a move which the lender thinks will help it bring new CASA accounts.
At the end of FY23, the bank‘s CASA (domestic) ratio stood at 37.82% to its domestic deposits. As a strategy, currently the bank is not taking long-term deposit at high cost.
The lender also plans to take a slew of measures, including surrendering extra spaces at its branches, to reduce rents in order to cut down fixed costs. “In the first phase, we have identified around 400 branches, where the bank has extra spaces,” Kumar said.
The bank is aiming at around 12-14% loan growth this fiscal. “Focus will be more on retail, agri and MSME,” the MD added.