UCO Bank net profit down by 26 % on higher NPA

Higher non-performing assets dragged the net profit of UCO Bank by nearly 26% for the fourth quarter of the financial year 2014-15 over the same period last year. The bank's net profit in the last quarter was Rs 209.28 crore, against that of Rs 284.70 crore in Q4 of 2013-14.

"The two main reasons for drop in profit are slow growth of advances and slippages. Earlier, we expanded in corporate sectors. Many of these assets have slipped into NPA," said Arun Kaul, chairman and managing director, UCO Bank.

The bank's net NPA for the quarter ended 31st March 2015 was nearly Rs 6,330 crore, against about Rs 3556 crore in the same period last year. In terms of percentage, the net NPA of the bank at the end of 31st March 2015 was 4.30%, against 2.38% in the same period last year.

In Q4 of FY15, there was a gross NPA addition of nearly Rs 2074 crore, of which 46.3% restructured assets, amounting to Rs 961 crore slipped, with the maximum slippages in sectors like power and distribution, iron and steel and infrastructure.

The bank has created a pool of NPA saleable assets of nearly Rs 3000 crore. In the last quarter, the bank could sell NPA worth nearly Rs 115 crore to asset reconstruction companies.

The bank made a total provisions of Rs 1019 crore in the last quarter, against Rs 1089 crore in the corresponding period last year. During fiscal 2014-15, the net additions to NPA was Rs 3644 crore. Fresh NPA additions for the same period was Rs 7551 crore, of which the slippages from restructured loans to the NPA category were Rs 2559 crore.

The bank's total advances showed a growth of nearly 3.6%, while deposits grew by 7.4% on a year-on-year basis as on 31st March 2015. The bank's capital adequacy ratio as on March 31, 2015 was 12.18%.

This apart, with oil prices going down the bank has also been witnessing a drop in deposits on account of Iran. The bank deposits from Iran has come down to nearly Rs 17000 crore, against a peak level of Rs 23000 crore.

"In the backdrop of prolonged economic slowdown and uneven recovery leading to slippages in asset health, the bank has consistently taken a decision to pursue selective growth. It has been focusing on low risk assets and retail," said Kaul.