UCO Bank — Q1 FY27 earnings call

Call held 23 Jul 2026

Management summary

UCO Bank delivered a strong Q1 FY27 performance with robust business growth, significant improvement in asset quality, and a sharp rise in operating profit. While net profit was impacted by a one-time DTA charge, core operational metrics like NIM and credit cost remained healthy. The bank continues its digital transformation and focuses on RAM sector growth, with management expressing confidence in maintaining performance continuity.

Highlights

  • Total business grew 15.53% YoY to ₹6,05,000 crores, driven by 21.18% Advances growth and 11.28% Deposit growth.

  • Operating Profit increased by 79.8% to ₹2,810 crores, supported by 16.85% NII growth and 35% fee-based income growth.

  • Asset quality significantly improved with Gross NPA at 2.08% (down 55 bps YoY) and Net NPA at 0.25% (down 20 bps YoY).

  • Provision Coverage Ratio (PCR) is robust at 97.85%, with credit cost controlled at 0.39% and slippage ratio at 0.63%.

  • CASA ratio maintained at 36.94%, with CASA growth of 12.34% YoY.

Concerns

  • Net Profit growth was limited to 8% YoY (₹656 crores) due to a one-time Deferred Tax Asset (DTA) charge of ₹1,237 crores.

  • Operating Profit included ₹1,018 crores in recoveries from TWO accounts, with ₹800 crores from a few accounts not expected to repeat, which will normalize the cost-to-income ratio going forward.

  • Fee income from loan processing declined this quarter due to reclassification and lower sanctions/renewals in Q1.

Key financials

  1. Total Business ₹6.05L Cr +15.5%YoY
  2. Global Advances ₹2.73L Cr +21.2%YoY
  3. Deposits ₹3.32L Cr +11.3%YoY
  4. Operating Profit ₹2,810 Cr +79.8%YoY
  5. Net Profit ₹656 Cr +8%YoY
  6. Gross NPA 2.1%
  7. Net NPA 0.25%
  8. NIM 3%
  9. Cost-to-Income Ratio 37.5%

What they filed

Q1 FY27: revenue up 8.7%, net profit up 8.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue6,078 6,220 6,745 6,436 6,537 +8%6,652 +7%6,656 −1%6,996 +9%
Net profit607 640 666 607 620 +2%740 +16%801 +20%656 +8%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • RAM Sector
    25.3% Growth64.5% Share of Total Advances
  • Retail Advances
    27.3% Growth
  • Agriculture Advances
    30% Growth
  • MSME Advances
    18.8% Growth
  • Corporate Advances
    17% Growth

Guidance & targets

Credit Growth

  • Overall Credit Growth Credit Growth · FY27 · Medium confidence 12-14%
    Though we have the guidance of 12 to 14%, we will try to maintain it above that only.

    — Mr. Rajendra Kumar Saboo

Deposit Growth

  • Overall Deposit Growth Deposit Growth · FY27 · High confidence 10-12%
    Deposit growth, we were at 11.28% against the guidance given 10 to 12%.

    — Mr. Rajendra Kumar Saboo

CASA Ratio

  • CASA Ratio CASA Ratio · FY27 · High confidence Just below 37%
    We have maintained CASA ratio within the guidance, just below 37%.

    — Mr. Rajendra Kumar Saboo

RAM Sector Advances

  • RAM Sector Advances Share RAM Sector Advances · FY27 · High confidence 62-65%
    RAM sector Advances constitute 64.5%, is against our guidance of 62 to 65%.

    — Mr. Rajendra Kumar Saboo

Credit Cost

  • Credit Cost Credit Cost · FY27 · High confidence Below 0.75%
    We have given guidance to maintain the credit cost below 0.75% against which in the 1st Quarter, our annualized credit cost is 0.39%.

    — Mr. Rajendra Kumar Saboo

Slippage Ratio

  • Slippage Ratio Slippage Ratio · FY27 · High confidence Less than 1%
    Our Slippage Ratio, we have given guidance of 1%, less than 1% and our actual Slippage Ratio annualized for the quarter is 0.63%.

    — Mr. Rajendra Kumar Saboo

NIM

  • Net Interest Margin NIM · FY27 · High confidence 2.8-2.9%
    So, our NIM will be 2.8 to 2.90; the guidance will be the same, but we will try to keep it above that only.

    — Mr. Rajendra Kumar Saboo

Cost-to-Income Ratio

  • Cost-to-Income Ratio Cost-to-Income Ratio · FY27 · Medium confidence Below 50% or around 50%
    we will be able to maintain our cost-to-income ratio below 50% or around 50% only; not much above that.

    — Mr. Rajendra Kumar Saboo

ROA

  • Return on Assets ROA · Year-end · Medium confidence Near 1%

    From 0.68% today

    ROA may be at 0.68% today, we see at the year end, maybe slightly near to 1%.

    — Mr. Rajendra Kumar Saboo

Vehicle Loan Growth

  • Vehicle Loan Growth Vehicle Loan Growth · Going forward · Medium confidence Around 30%
    I expect that around 30% growth in Vehicle Loan can be maintained, even if with a higher base

    — Mr. Rajendra Kumar Saboo

Home Loan Growth

  • Home Loan Growth Home Loan Growth · Going forward · Medium confidence 20-25%
    and 20 to 25% growth can be maintained in Home Loans because the demand is there and we can continue that.

    — Mr. Rajendra Kumar Saboo

MSME Growth

  • MSME Growth MSME Growth · Going forward · Medium confidence 19-20%
    Though we have grown 19-20% in the past few quarters, and we will continue to grow in that range only in MSME sector as well.

    — Mr. Rajendra Kumar Saboo

Credit Pipeline

  • Credit Sanctions Pipeline Credit Pipeline · Ongoing · High confidence 15,000 crores
    We have a good pipeline of credit sanctions, that is around 15,000 crores of pipeline we are still holding, which may be disbursed in due course of time after the formalities are completed.

    — Mr. Rajendra Kumar Saboo

What to watch in Q2 FY27

Credit Growth Target Revision

after Q2 FY27 numbers
Current 21% actual vs 12-14% guidance
Target Revised guidance for FY27

Why it matters

Management indicated they would review and potentially revise their credit growth guidance after the Q2 results, which could signal increased confidence or a more aggressive growth strategy.

But we have kept the guidance as of now the same level. We will review the guidance after the 2nd Quarter numbers, because in the midterm, we can review. Immediately within the 1st Quarter, it is not proper to review this guidance. So we will continue with this guidance in the 2nd Quarter itself, and then we will review after the 2nd Quarter number whether we need to change the guidance. Maybe, hopefully, we can better the guidance further.

Risks & concerns

  • Non-recurring nature of significant recoveries in Operating Profit

    medium

    ₹800 crores out of ₹1,018 crores in recoveries from TWO accounts in Q1 FY27 are from a few specific accounts and are not expected to repeat, which will normalize the cost-to-income ratio in future quarters.

    Management acknowledged

  • One-time DTA charge impacting Net Profit

    low

    A one-time Deferred Tax Asset (DTA) charge of ₹1,237 crores was provided in Q1 FY27 due to a shift to the new tax regime, reducing reported Net Profit.

    Management acknowledged

  • Decline in fee income from loan processing

    low

    Fee income from loan processing declined due to a shift from upfront recognition to actual basis and lower sanctions/renewals in Q1, but is expected to normalize.

    Analyst acknowledged

Q&A highlights

7 direct
Guidance on various financial parameters (cost of funds, NIM, cost-to-income, ROA, credit growth) Direct
So, our NIM will be 2.8 to 2.90; the guidance will be the same, but we will try to keep it above that only. So, this is about the NIM and margin. ... we will be able to maintain our cost-to-income ratio below 50% or around 50% only; not much above that. So, that is our expectation from cost-to-income ratio.

Analyst sought comprehensive forward guidance on key profitability and efficiency metrics, which management provided with specific targets and explanations.

Asked by Mr. Sushil Choksey

Impact of one-time DTA charge on ROA and hypothetical ROA under old tax regime Direct
Had not been there, then it could have been added into the profit. So, simply saying we could have more profits and then we can calculate the ROA, that could have been more than 1% also. That is our rough estimate, but we have not calculated by that way, because ultimately, this is the situation and this is the final number, which we have.

Analyst probed the true underlying profitability by asking for ROA without the one-time DTA charge, revealing a potential ROA of over 1%.

Asked by Mr. Niteen S. Dharmawat

Sources of competition (public, private, NBFCs) Partial
See all these are competitors in the market, so everybody is facing competition from each other. So we can't quantify as to how much competition I am getting from the private or from the public sector. We are getting good growth, you can see the numbers.

Analyst sought specific insights into competitive pressures, but management gave a general response, emphasizing their growth despite competition rather than detailing specific competitive threats.

Asked by Mr. Niteen S. Dharmawat

Areas of maximum growth and potential risks/stress Direct
So growth area, as I told you that we continue to grow in the Deposit side also. ... Then on the credit side, our focus will continue to be on RAM sector, Retail, Agri and MSME. ... As of now, we have not seen any risk from any sector. As of now, we have not seen any such risk. No stress we have seen.

Analyst sought clarity on growth drivers and potential vulnerabilities, with management outlining focus areas and stating no current stress.

Asked by Mr. Niteen S. Dharmawat

Revision of credit growth target (12-14% vs actual 21%) Direct
Though we have kept our guidance in the beginning of the year somewhat conservatively at 12-14%, actually we have grown 21%. Going forward also, we see that good growth may happen. And our endeavour is that we should grow... as a small bank, we should grow more than the industry growth. So that is our endeavour. But we have kept the guidance as of now the same level. We will review the guidance after the 2nd Quarter numbers, because in the midterm, we can review.

Analyst challenged management on conservative guidance given strong actual performance, leading to management's commitment to review targets after the next quarter.

Asked by Mr. Ashok Ajmera

ECLGS sanction and disbursement figures, and impact on asset quality Direct
we have sanctioned around 2,150 crores in ECLGS. Out of these 2,150 crores, we have disbursed around 1,700 crores... We don't see any stress or any issue in any of our segment of any lending book. So that's why our slippages are contained.

Analyst inquired about the bank's participation in the ECLGS scheme and its effectiveness in mitigating stress, confirming significant sanctions and disbursements with no perceived stress.

Asked by Mr. Ashok Ajmera

ECL provisioning requirements and buffer Direct
we have already created a buffer of around 60% of that requirement. So already we have 60% requirement that we have provided for. ... And remaining 40% provisions which we require for the transition date, that we plan to create in the next 4-5 quarters before this ECL calculation comes into the picture.

Analyst sought clarity on the bank's preparedness for Expected Credit Loss (ECL) implementation, revealing that 60% of the requirement is already buffered and the rest will be provisioned over the next 4-5 quarters.

Asked by Mr. Ashok Ajmera

Decline in fee income from loan processing and increase in other commission income Direct
Earlier we were recovering the renewal charges upfront for the year, and then we used to allocate quarter-wise, as per the accounting norms. So that was a lumpsum amount. But now, this year, we have started charging on an actual basis. ... As far as commission from others is concerned, there is growth in Other Commission Income. And particularly the growth comes from one segment, like we have also given in our notes on accounts that we have sold PSLC; PSLC of around 2,000 crores, and we have earned a commission of 55 crores into the PSLC.

Analyst questioned the divergence in fee income components, leading to an explanation of accounting changes for loan processing fees and the impact of PSLC sales on other commission income.

Asked by Mr. Ashlesh

2 min read 5 chapters

Detailed narrative

Robust Business Growth Across Segments

UCO Bank reported a strong 15.53% year-on-year growth in total business, reaching ₹6,05,000 crores as of June 30, 2026. This growth was primarily fueled by a 21.18% increase in global advances to ₹272,768 crores and an 11.28% rise in deposits to ₹332,315 crores. The RAM (Retail, Agriculture, MSME) sector was a key driver, growing 25.27%, with Retail advances up 27.32%, Agriculture up 30%, and MSME up 18.79% year-on-year. Corporate advances also contributed with a 17% growth.

Significant Improvement in Asset Quality

The bank demonstrated substantial improvement in asset quality, with Gross NPA reducing by 55 basis points year-on-year to 2.08%. Net NPA also saw a decline of 20 basis points year-on-year, settling at a healthy 0.25%. The Provision Coverage Ratio (PCR) stood strong at 97.85%, indicating adequate provisioning against potential losses. The annualized credit cost for Q1 FY27 was well-controlled at 0.39%, significantly below the guidance of 0.75%, and the slippage ratio was 0.63% against a guidance of less than 1%.

Profitability Boosted by Core Income, Impacted by One-Time Charge

Operating Profit surged by 79.8% to ₹2,810 crores in Q1 FY27, driven by a 16.85% growth in Net Interest Income (NII) and a 35% increase in fee-based income. However, Net Profit grew by a more modest 8% year-on-year to ₹656 crores due to a one-time Deferred Tax Asset (DTA) charge of ₹1,237 crores, resulting from a shift to the new tax regime. Management noted that without this charge, Net Profit would have been higher, potentially leading to an ROA of over 1%.

Strategic Digital Initiatives and New Product Launches

UCO Bank is actively pursuing digital transformation through 'Project Parivartan 2.0', aiming to convert its call center into a profit center and enhance customer services via IVR. Key digital initiatives include the launch of STP Home Loan Journey, digital marketing solutions, integration with RBI's ULI, and implementation of CBDC. The bank also introduced new products like 'UCO Rising Star' for children, 'UCO Gig Scheme' for gig workers, 'UCO Business Aarambh Current Account' for startups, and a 'UCO 3-in-1' product for younger generations interested in investments, in collaboration with Aditya Birla Money.

Outlook and Guidance for FY27

Management reiterated its FY27 guidance for credit growth at 12-14% (though actual Q1 growth was 21%+) and deposit growth at 10-12%. The Net Interest Margin (NIM) of 3.05% exceeded the guidance of 2.8-2.9%, with efforts to maintain it above this level. The cost-to-income ratio, currently at 37.49% (down from 52.66% in March), is expected to normalize to below 50% or around 50% for FY27, considering the non-recurring nature of some Q1 recoveries. The bank aims for an ROA near 1% by year-end and plans to provision the remaining 40% of ECL requirements over the next 4-5 quarters.

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