UCO Bank — Q4 FY26 earnings call

Call held 27 Apr 2026

Management summary

UCO Bank delivered robust Q4 FY26 results, outperforming most guidance metrics with strong credit growth of 19.44% YoY and a 22% YoY increase in quarterly net profit to Rs.801 crore. Asset quality saw significant improvement, with Gross NPA at 2.17% and Net NPA at 0.27%, supported by a substantial provision buffer of Rs.1,900 crore. The bank continues its digital transformation, targeting a 0.95-1% ROA by FY27, despite a negative contribution from treasury operations this quarter.

Highlights

  • Gross advances grew by 19.44% YoY, exceeding the guidance of 12-15%.

  • Net profit for the quarter was Rs.801 crore, marking a 22% growth YoY.

  • Asset quality significantly improved with Gross NPA at 2.17% (52 bps reduction YoY) and Net NPA at 0.27% (23 bps reduction YoY).

  • Provision Coverage Ratio (PCR) improved to 97.79%, an increase of 110 bps YoY.

  • Cost-to-income ratio improved by 581 bps YoY to 52.66%, reflecting enhanced operational efficiency.

Concerns

  • Treasury operations recorded a negative profit of Rs.16 crore this quarter, with a Rs.135 crore negative MTM impact on the AFS book due to firming yields.

  • SMA 1 numbers increased from Rs.260 crore to Rs.651 crore, although management attributed this to a 'February effect' and bucket shifting rather than new stress.

Key financials

3 periods

Headline

  • Business Growth
    14.9%
  • Gross Advances Growth
    19.4%
  • Deposits Growth
    11.6%
  • CASA Ratio
    38.6%
  • Gross NPA
    2.2%
    YoY -0.52%
  • Net NPA
    0.27%
    YoY -0.23%
  • PCR
    97.8%
    YoY +1.1%
  • Cost-to-Income Ratio
    52.7%
    YoY -5.8%
  • Capital Adequacy Ratio
    18.6%
  • Tier-1 Capital
    16.6%
  • Gold Loan Portfolio
    ₹18,000 Cr
  • AFS Reserves
    ₹-140 Cr

Q4 FY26

  • Net Profit
    ₹801 Cr
    YoY +22%
  • Treasury Profit
    ₹-16 Cr

FY26

  • Operating Profit
    ₹6,429 Cr
    YoY +6.5%
  • Full-Year Profit
    ₹2,768 Cr
  • Fee-Based Income
    ₹516 Cr
    YoY +32%

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.

Capital allocation

high confidence
  • Dividend ₹0.44/share (final) Payout ratio 20%
    The Board has approved declaration of dividend at the rate of 4.40% i.e. 44 paisa per equity share, subject to approval of the shareholders in the ensuing Annual General Meeting, which works out to be a dividend payout of approximately 20%.
  • Liquidity Liquidity disclosed The bank holds an additional provision buffer of approximately Rs.1,900 crore, comprising Rs.1,038 crore ECL provision, Rs.341 crore contingency provision, and Rs.530 crore COVID-19 provision.
    So, ECL provision held as on this quarter is Rs.1038 crore, plus Rs.341 crore contingency provision is also made. So, if we take both of them together, more than 1400 crore is already available towards ECL. Along with that, during COVID times, we made Rs.530 crore of provision for COVID-19. So that is also available. So, all three put together today, we are holding around Rs.1,900 crore of additional provision as a buffer towards our ECL framework, which may trigger at the time when we have to shift to that. So, Rs.1900 crore of buffer is there.

Guidance & targets

Deposits

  • Deposit Growth Deposits · FY27 · High confidence 10-12%
    Now, coming to the guidance for the current year, deposits we have kept the guidance in the same range, 10 to 12%;

    — Mr. Ashwani Kumar - MD & CEO, UCO Bank

Credit

  • Credit Growth Credit · FY27 · High confidence 12-14%
    credit 12 to 14%;

    — Mr. Ashwani Kumar - MD & CEO, UCO Bank

CASA

  • CASA Ratio CASA · FY27 · High confidence 37-38%
    CASA again 37 to 38%;

    — Mr. Ashwani Kumar - MD & CEO, UCO Bank

RAM

  • RAM Segment Share RAM · FY27 · High confidence 62-65%

    Previously 61-63% → 62-65%

    RAM we have improved our guidance to 62 to 65%;

    — Mr. Ashwani Kumar - MD & CEO, UCO Bank

CD Ratio

  • CD Ratio CD Ratio · FY27 · High confidence 80-82%
    CD ratio 80 to 82%;

    — Mr. Ashwani Kumar - MD & CEO, UCO Bank

Credit Cost

  • Credit Cost Credit Cost · FY27 · High confidence <0.75%
    credit cost less than 0.75%;

    — Mr. Ashwani Kumar - MD & CEO, UCO Bank

Asset Quality

  • Gross NPA Asset Quality · FY27 · High confidence <2%
    gross NPA less than 2%;

    — Mr. Ashwani Kumar - MD & CEO, UCO Bank

  • Net NPA Asset Quality · FY27 · High confidence <0.2%
    net NPA less than 0.2%;

    — Mr. Ashwani Kumar - MD & CEO, UCO Bank

  • Slippage Ratio Asset Quality · FY27 · High confidence <1%
    slippage ratio less than 1%;

    — Mr. Ashwani Kumar - MD & CEO, UCO Bank

Recovery & Upgradation

  • Recovery and Upgradation Recovery & Upgradation · FY27 · High confidence Rs.2,000-2,500 crore
    recovery and upgradation in the range of Rs.2,000 to 2,500 crore.

    — Mr. Ashwani Kumar - MD & CEO, UCO Bank

Profitability

  • ROA Profitability · end of next financial year · Medium confidence 0.95-1%
    And I believe that by end of next financial year, we should be nearing 0.95 to 1% ROA levels.

    — Mr. Ashwani Kumar - MD & CEO, UCO Bank

Market context

  • NIM Global NIM · FY27 · High confidence 2.8-2.9%
    NIM global in the range of 2.8 to 2.9%;

    — Mr. Ashwani Kumar - MD & CEO, UCO Bank

What to watch in Q1 FY27

ROA Improvement towards 1%

end of next financial year (FY27)
Current 0.87%
Target Nearing 0.95-1%

Why it matters

Achievement of 1% ROA is a key profitability target for the bank, indicating sustained operational efficiency and asset utilization.

And I believe that by end of next financial year, we should be nearing 0.95 to 1% ROA levels.

Risks & concerns

  • Geopolitical situation (West Asia war)

    medium

    Analyst questioned if lower FY27 guidance was due to West Asia crisis; management stated guidance is consistent and they typically outperform, with no major impact seen on MSME slippages.

    Analyst downplayed

  • Pricing pressure in corporate lending

    medium

    The bank has a Rs.14,000 crore corporate pipeline but is not disbursing loans below its expected price, indicating competitive pricing environment.

    Management acknowledged

  • Treasury volatility and MTM impact

    medium

    Treasury operations had a negative profit of Rs.16 crore in Q4 FY26 due to Rs.135 crore negative MTM impact from firming yields, though management expects stability with global environment improvement.

    Management acknowledged

Q&A highlights

8 direct
FY27 Guidance and Geopolitical Impact Direct
You have apprehended that because of the West Asia crisis, we have toned down the guidance. Let me make it very clear that if you look at our guidance for the last three years, it has been in this range only, and our achievements have always surpassed the guidance. So, the guidance remained 12 to 14%, but achievements were much higher than guidance.

Analyst questioned if the FY27 guidance was conservative due to geopolitical risks; management clarified it's a consistent approach they typically outperform, not a reflection of anticipated crisis impact.

Asked by Mr. Ashok Ajmera – Ajcon Global

SMA Numbers and Potential Stress Direct
More than 1 crore of SMA 0, 1, and 2 together are at 0.45% of standard advances. While SMA 2 is lower and SMA 1 is higher, this is due to the February effect. So it is not that SMA 1 has jumped significantly; overall SMA remains the same, only bucket shifting is happening.

Analyst raised concern about an increase in SMA 1; management provided a detailed explanation attributing it to a calendar effect rather than new underlying stress, reassuring on asset quality.

Asked by Mr. Ashok Ajmera – Ajcon Global

Adequacy of Provisions and ECL Direct
ECL provision held as on this quarter is Rs.1038 crore, plus Rs.341 crore contingency provision is also made. Along with that, during COVID times, we made Rs.530 crore of provision for COVID-19. So, all three put together today, we are holding around Rs.1,900 crore of additional provision as a buffer towards our ECL framework.

Analyst questioned if the bank was adequately provisioning for unexpected impacts; management confirmed a substantial buffer of ~Rs.1,900 crore, indicating strong financial resilience.

Asked by Mr. Ashok Ajmera – Ajcon Global

QIP Plans and Share Price Direct
So, this quarter we do not have any plans. We will be going to the AGM for approval. First, we will get the approval of the shareholders, and thereafter, at the right opportune time, when the market also supports, we will go for the QIP. That will not be in the immediate, this quarter.

Analyst inquired about the timing of the QIP given strong results and a low share price; management clarified that while approved, it's not immediate and depends on shareholder approval and market conditions.

Asked by Mr. Ashok Ajmera – Ajcon Global

Corporate Credit Pipeline and Growth Segments Direct
See, we have around Rs.14,000 crore of pipeline in the Corporate segment currently, and we have certain sanctions already in place, but because of the pricing issue, we are not able to disburse. The growth or demand is coming from renewables, data centers, smart metering, and even road projects.

Analyst sought details on corporate credit growth drivers; management revealed a significant pipeline but highlighted pricing discipline and identified key growth sectors like renewables and data centers.

Asked by Mr. Ashok Ajmera – Ajcon Global

Treasury Operations Profitability Direct
our Treasury, I think, had a profit of around Rs.130 odd crore last quarter, but this quarter it was Rs. -16 crores only. So, for the AFS book, Rs.135 crore of the negative impact of MTM was there. And going forward, I think the way the liquidity market is behaving, the way the things are shaping out, I think once the stability in the overall global environment is achieved, I think there will be a good amount of Treasury traction in this financial year.

Analyst questioned the negative treasury contribution; management explained it was due to MTM impact from yield movements and expressed optimism for better performance with global stability.

Asked by Mr. Ashok Ajmera – Ajcon Global

Path to 1% ROA Franchise Direct
To build on ROA, we need to improve our net interest margin. We need to continue to focus on our CASA growth also, and our NI improvement also. So, there are a number of parameters where we are working. We need to work on our TWO recovery also. And I believe that by end of next financial year, we should be nearing 0.95 to 1% ROA levels.

Analyst asked about the bank's strategy to achieve a 1% ROA; management outlined a multi-pronged approach focusing on NIM, CASA, and recovery, setting a clear target for FY27.

Asked by Mr. Hriday Choksey

MSME Portfolio Impact from West Asia War and CGTMSE Coverage Direct
See, in the current scenario, we have not yet seen any major impact. Currently, if you look at our slippages, they are in tandem with the previous quarter from the MSME segment. And around 40% of our advances are covered under CGTMSE.

Analyst inquired about potential geopolitical impact on MSME; management reported no major impact on slippages and highlighted 40% CGTMSE coverage as a mitigant.

Asked by Chat Box

2 min read 7 chapters

Detailed narrative

Robust Credit and Deposit Growth Outperformance

UCO Bank reported a strong overall business growth of 14.95% on a YoY basis for FY26. This was primarily driven by gross advances growing significantly by 19.44% YoY, surpassing the bank's guidance of 12-15%. Deposits also saw healthy growth of 11.59% YoY, with CASA growth at 12.46% and the CASA ratio maintained above 38% at 38.65%, improving by 75 bps over the last year.

Significant Asset Quality Improvement

The bank achieved substantial improvements in its asset quality during FY26. Gross NPA improved to 2.17%, a reduction of 52 bps over the previous year, while Net NPA was brought down to 0.27%, a 23 bps reduction. The Provision Coverage Ratio (PCR) also saw a significant improvement to 97.79%, up by 110 bps YoY, demonstrating robust provisioning against potential losses.

Enhanced Profitability and Operational Efficiency

UCO Bank's operating profit for the full year FY26 was Rs.6,429 crore, representing a growth of 6.49%, leading to a full-year net profit of Rs.2,768 crore. For Q4 FY26, net profit was Rs.801 crore, a 22% growth YoY. The cost-to-income ratio improved notably by 581 bps YoY to 52.66%, and fee-based income grew by 32% YoY to Rs.516 crore, reflecting improved operational efficiency and diversified revenue streams.

Strategic Digital Transformation and Customer Engagement

The bank's digital transformation initiative, Project Parivartan, has seen 31 customer journeys completed, contributing Rs.25,000 crore to total digital business. Mobile banking users have increased five-fold to 153 lakhs in three years, with active users reaching 70 lakhs. Over 2.5 lakh customers received digital loans in FY26, and the bank's mobile app boasts high ratings of 4.7-4.8 on Android and 4.6 on Apple stores.

FY27 Guidance and Outlook for ROA

For the current financial year (FY27), UCO Bank has set guidance for credit growth at 12-14% and deposit growth at 10-12%. The bank aims to further improve asset quality, targeting Gross NPA below 2% and Net NPA below 0.2%. Management expressed confidence in nearing a Return on Assets (ROA) of 0.95-1% by the end of FY27, driven by continued focus on NIM improvement, CASA growth, and recovery efforts.

Treasury Operations and Capital Raising Plans

Treasury operations recorded a negative profit of Rs.16 crore in Q4 FY26, primarily due to a Rs.135 crore negative mark-to-market impact on the AFS book from firming yields. However, management anticipates improved treasury traction in FY27 with global stability. While a QIP has been board-approved, the bank has no immediate plans for this quarter, awaiting AGM approval and favorable market conditions, supported by a substantial provision buffer of approximately Rs.1,900 crore.

Segmental Growth and Gold Loan Portfolio

The RAM segment grew by over 24%, with Retail advances up 26%, Agriculture advances up 26%, and MSME advances up 19%. Within Retail, housing loans grew by 19% and car loans by 71%. The total gold loan portfolio, including Retail and Agri, stands at approximately Rs.18,000 crore, with a weighted average yield estimated between 8.5% and 9%.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Financial Services earnings calls