UCO Bank Q4 net profit at Rs 16.78 crore as provisions for bad loans fall

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June 27, 2020 12:01 AM

The bank, in its stock exchange disclosure, said in accordance with RBI guidelines relating to ‘COVID 19 Regulatory Package’, Rs 571.54 crore asset classification benefits was extended. And it made Rs 57.15-crore provision in the fourth quarter related to the guidelines.

UCO Bank’s operating profit during the March quarter witnessed a 76.18% year-on-year.

Returning to profit after making losses for several consecutive quarters, state-run UCO Bank on Friday reported a net profit of Rs 16.78 crore for the fourth quarter ended March 31, against a net loss of Rs 1,552.03 crore for the same period a year ago, as its non-interest income increased and provisions for bad loans fell.

The Kolkata-based lender, which is under the prompt corrective action (PCA) framework of the Reserve Bank of India, had reported a net loss of Rs 960.17 crore for the third quarter of the last fiscal. The bank’s asset quality improved significantly as its gross non-performing assets (NPAs) in absolute terms fell 12.91% quarter-on-quarter to Rs 19,281.95 crore in the fourth quarter from Rs 22,139.65 crore in the third quarter of the last financial year. On a year-on-year basis, gross NPAs decreased by a whopping 35.5% from Rs 29,888.33 crore for the March quarter previous fiscal, according to a stock exchange filing of the bank.

During the period under review, gross NPAs as a percentage of total loans fell 268 basis points (bps) to 16.77% from 25% during the previous quarter. Net NPA ratio also decreased by 89 bps sequentially at 5.45%. The bank is hopeful of coming out of the prompt corrective action measure of the RBI as it has complied with all the key parameters required to come out of the PCA ambit. MD and CEO Atul Kumar Goel said bank has managed to comply on all the key parameters by bringing down its net NPA ratio to below 6% and posting a positive return on asset in the March quarter last fiscal, among others. “It (to come out of PCA) is a call that the regulator has to take. But we may discuss or even write to the RBI regarding the same,” Goel said.

The bank, in its stock exchange disclosure, said in accordance with RBI guidelines relating to ‘COVID 19 Regulatory Package’, Rs 571.54 crore asset classification benefits was extended. And it made Rs 57.15-crore provision in the fourth quarter related to the guidelines.

Provisions and contingencies fell 46.49% y-o-y to Rs 1,199.82 crore for the March quarter of FY20 from Rs 2,242.58 crore in the corresponding period of FY19. Provisions for NPAs also decreased by over 58% y-o-y at Rs 1,089.26 crore for the period under review from Rs 2,601.80 crore in the same period of FY19.

UCO Bank’s operating profit during the March quarter witnessed a 76.18% year-on-year jump to Rs 1216.60 crore from Rs 690.55 crore in the corresponding quarter of the previous fiscal as its non-interest income grew substantially. Non-interest income posted a whopping 109.64% y-o-y growth at Rs 768.78 crore during the January-March period last year. However, net interest income (NII) fell 2.89% y-o-y at Rs 1254.51 crore from Rs 1,291.96 crore for the corresponding period of FY19.

As India has no longer been importing oil from Iran, the bank is looking at alternative avenues to keep the rupee-payment mechanism with Iran alive. The bank had recently discussed with importers to see that if the mechanism could be used for import of items other than oil also.

“There is no fresh inflow in the payment account in the last few months. We are exploring the opportunity to import other commodities, like fresh fruits, under the mechanism so that money can come into the account. Our role here is not only to settle, but also to facilitate trade between India and Iran,” Goel added.

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