Calcutta, Jan. 24: A higher net interest income on the back of increased retail banking has helped Uco Bank report a more-than-three-fold rise in net profit at Rs 314.53 crore in the third quarter ended December.
Net profit stood at Rs 102.47 crore during the corresponding period of the previous fiscal.
Though net interest income grew 32.97 per cent to Rs 1,566 crore, the average cost of deposit fell to 6.27 per cent from 6.92 per cent in the same period a year ago.
Chairman and managing director Arun Kaul attributed the increase in profit to the bank’s efforts to focus more on low-cost CASA (current and savings account) deposits. “The bank is going more into low-risk business and most of the credit growth is because of low risk retail advances,” Kaul said today.
Revenues from retail banking grew 44.34 per cent, while earnings from corporate banking declined 4.5 per cent during the quarter.
CASA deposits stood at Rs 58,646 crore (33.37 per cent of domestic deposits) at the end of the quarter compared with Rs 47,691 crore in the same period a year ago. Both Uco Bank officials as well as analysts pointed out that the surge in CASA deposits was primarily because of the India-Iran trade payments, which is managed by the public sector lender.
Net profit also got a boost from the low tax expense on the back of a MAT (minimum alternate tax) credit for the quarter.
Gross non-performing assets (NPAs) as a percentage of total advances fell to 5.20 per cent from 5.53 per cent in the year-ago period. Kaul said during the quarter, the bank was able to lower fresh slippage and decrease its provision for bad loans to Rs 204 crore from over Rs 400 crore a year ago. It is also planning to sell bad assets worth Rs 1,900 crore for the second time during this fiscal.
Kaul added that with yields on government securities likely to soften in the fourth quarter, the bank would look out for trade opportunities that could increase its treasury earnings, leading to a rise in net interest income.
The Uco Bank scrip fell 2 per cent to Rs 75.95 on the Bombay Stock Exchange today.