Detailed Narrative
Robust Business and Credit Growth
UCO Bank reported a 13.25% YoY business growth, driven by a 10.64% increase in deposits and a significant 16.74% rise in advances. The RAM segment, comprising retail, agriculture, and MSME, was a key growth driver, expanding by 25.86%, with retail advances growing 28.18% and vehicle loans surging by 73%. The bank's CD ratio improved to 78.56% in December 2025 from 65% in March 2023, indicating efficient deployment of funds.
Improved Profitability and Margins
The bank's operating profit increased by 6% YoY to ₹1,680 crores, leading to a net profit of ₹739 crores, a 15.65% YoY growth. Net Interest Income (NII) grew by 11.27% YoY, and the global Net Interest Margin (NIM) improved to 3.08% from 3.03% in the previous quarter. The cost of funds decreased by 27 basis points to 4.48%, while the yield on advances stood at 8.06%, contributing to better profitability. The cost to income ratio also saw a significant reduction of 330 bps YoY, reaching 52.20%.
Enhanced Asset Quality
Asset quality saw substantial improvement, with Gross NPA reducing by 50 basis points YoY to 2.41% and Net NPA declining by 27 basis points YoY to 0.36%. The Provision Coverage Ratio (PCR) stood strong at 97.32%, with a tangible PCR of 85.47%. Slippages for the quarter were ₹419 crore, primarily from the RAM segment, and management expressed confidence in regularizing SMA-2 accounts, which stood at ₹316 crore for corporates, with no expectation of them slipping into NPA.
Strong Capital Adequacy and Provisioning
UCO Bank maintains a healthy Capital Adequacy Ratio (CAR) of 17.43%, with Tier 1 capital at 15.41% and CET1 at 15.18%. Including the 9-month profit, the CAR further strengthens to 18.67%. The bank has already provisioned ₹1,252 crores towards Expected Credit Loss (ECL), approximately 50% of the estimated total of ₹2,500-₹3,000 crores, with plans to complete the provisioning by June 2027, building approximately ₹200 crore this quarter.
Digital Transformation & IT Initiatives
The bank's 'Project Parivartan' has made significant strides, with over 30 digital journeys live across retail, Agri, MSME, and liability segments, building a digital business book of ₹15,900 crore. More than 50% of FDs and loans against FDs are now processed digitally. The bank plans to invest ₹800-₹1,000 crore in IT for the next year, following a spend of ~₹700 crore out of a >₹1000 crore budget this year, focusing on omni-channel experience, supply chain finance, robotic process automation, and cybersecurity.
Strategic Expansion and CASA Strength
UCO Bank is strategically expanding its presence, focusing on western and southern regions with higher GDP contributions, while leveraging its strong base in East and Northeast India. The bank has successfully maintained its CASA ratio in the 37-38% range, improving by 44 bps to 38.41%, which is crucial for cost-effective funding. Initiatives like revamping saving/current account products and targeting central government salary accounts are expected to further strengthen the CASA franchise.
NBFC and Gold Loan Portfolio Management
The bank's total exposure to NBFCs stands at ₹27,000 crore, representing 12% of its total book, with no significant slippages reported except for MFI, where exposure has reduced from ~₹1,300 crore a year back to less than ₹500 crore and is under control. The gold loan portfolio is ~₹15,000 crore, split between retail (~₹4,000 crore) and agriculture (~₹10,500 crore), with conservative LTVs of 25-30% for retail and 15-20% for agriculture, ensuring asset quality.