UCO Bank posts Rs. 440.56 cr net loss on higher provisioning, asset quality deteriorates

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August 9, 2016 10:30 PM

State-run Uco Bank on Tuesday reported a net loss of Rs. 440.56 crore for the quarter ended June 30 as against a net profit of Rs 256.70 crore in the year-ago period due to lower operating profit and higher provisioning to cover surge in bad loans.

 

Uco Bank's profitability also took a hit as the lender saw a 40% dip in its volume of rupee-deposits it receives from local oil companies buying Iranian crude to RS 9000 crore from Rs.15,000 crore during the same period of FY15, said executive director Charan Singh.(Express Photo)Uco Bank’s profitability also took a hit as the lender saw a 40% dip in its volume of rupee-deposits it receives from local oil companies buying Iranian crude to RS 9000 crore from Rs.15,000 crore during the same period of FY15, said executive director Charan Singh.(Express Photo)

State-run Uco Bank on Tuesday reported a net loss of Rs. 440.56 crore for the quarter ended June 30 as against a net profit of Rs 256.70 crore in the year-ago period due to lower operating profit and higher provisioning to cover surge in bad loans.

The Kolkata-based lender’s asset quality during the June quarter deteriorated significantly with the non-performing assets (NPAs) in absolute term rose by nearly 107.42% y-o-y to Rs. 22597.70 crore compared to Rs. 10894.41 crore in the same period previous fiscal. Its gross NPA as a percentage of total loans rose to 17.19% in the first quarter from 7.30% a year ago.

The Kolkata-based lender’s operating profit fell 30.25% year-on-year to Rs. 810.16 crore during June quarter from Rs. 1161.46 crore for the corresponding period last fiscal.

“The loss was on account of higher provisioning and lower operating profit,” said Uco Bank MD and CEO RK Takkar.

On the back of a whopping surge in bad loans, the public sector lender’s provisions and contingencies rose by 63.77 % y-o-y to Rs.1250.50 crore for the first quarter this fiscal from Rs.763.56 crore for the corresponding period last fiscal.

Takkar said the bank’s fresh slippages in the quarter under review stood at about Rs 3116 crore, up from Rs 1252 crore in the corresponding period last year. About 50% of the fresh slippages came from large corporate accounts. “Some large accounts which slipped into the NPA category this quarter were Essar Steel, GVK Power & Infrastructure, Bhushan Energy, Sterling Global and Sterling SEZ. However, we saw good recovery from small accounts during this quarter,” he said, adding during the June quarter recovery stood at Rs. 1400 crore, up from Rs. 360 crore in the yea-ago period.

“Hopefully in the coming quarter NPA level would come down,” he added. The bank’s net NPA ratio in the June quarter this fiscal rose to 10.04% as against 4.53% in the same period last fiscal.

The bank has already put NPAs with a total outstanding amount Rs.1767 crore on sale to clean up its balance sheet. It has invited Expression of Interest (EOI) from asset reconstruction companies (ARCs), banks, financial institutions and eligible NBFCs for the proposed sale of its 22 NPA accounts.

Uco Bank’s profitability also took a hit as the lender saw a 40% dip in its volume of rupee-deposits it receives from local oil companies buying Iranian crude to RS 9000 crore from Rs.15,000 crore during the same period of FY15, said executive director Charan Singh.

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