The Telegraph
Since 1st March, 1999
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UBI ready to hit market trail

Calcutta, April 23: United Bank of India (UBI) will launch its maiden public offer in the second half of the current financial year.

'Our aim is to completely clear our balance sheet and become fundamentally strong so that we can command a good premium on the public offer price,' said executive director K. N. Prithviraj. The bank had accumulated losses of Rs 1,500 crore three years back.

This has been reduced to Rs 278 crore in the last fiscal. 'In the next six months, we will achieve a zero non-performing assets (NPA) level,' Prithviraj added.

The bank has posted a net profit of Rs 300 crore for 2004-05, a decline of 4.7 per cent from Rs 315 crore achieved during the previous fiscal.

Prithviraj explained that the drop is due to lower investment and trading incomes by Rs 100 crore and also higher provisioning for wage arrears by Rs 90 crore.

The total business of the bank was Rs 37,187 crore against Rs 31,179 crore, an increase of 19.3 per cent.

'We plan to achieve Rs 8,000-crore business growth in the current fiscal with an equal contribution from credits and deposits, which will take the figure to Rs 45,000 crore,' said Prithviraj.

'We will maintain the same growth momentum and cross Rs 50,000 crore by the end of 2006-07,' he added.

Deposits have risen to Rs 25,348 crore in 2004-05 against Rs 22,758 crore during the previous fiscal, a growth of 11.4 per cent. Gross advances increased 40.6 per cent to Rs 11,839 crore in 2004-05 compared with Rs 8,421 crore during the previous year.

Operating profit increased 12.6 per cent to Rs 690 crore against Rs 613 crore in 2003-04. The net NPA ratio as percentage of net advances dropped to 2.43 per cent from 3.75 per cent in the previous year, while the gross NPA ratio dropped to 6.14 per cent from 9.07 per cent.

The bank maintains a capital adequacy ratio (CAR) of 18.16 per cent against the stipulated norm of 9 per cent.

According to Prithviraj, the bank has sufficient resources to meet its business growth plans in the near future and thus there is no need to raise further resources.

However, the funds from the public offer will be used to meet the capital adequacy norms under Basel II, which come into force from 2007.

At present, UBI has 1,310 branches across the country and has also received permission from the Reserve Bank of India to set up a representative office in Bangladesh.

The bank has also mandated National Institute of Bank Management (NIBM) to study and suggest strategies for restructuring the organisation. 'We expect the institute to submit the complete report by the end of next month,' added Prithviraj.

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