UCO Bank reports 50% surge in Q2 FY 2024-25 profits, boosted by retail and MSME growth

UCO Bank has announced its financial results for the second quarter of FY 2024-25, revealing a substantial increase in its profitability. The state-owned lender posted a net profit of ₹603 crore for the quarter ending 30 September 2024, marking a 50% year-on-year growth from ₹402 crore reported in the same period last year. The operating profit also surged, registering an impressive 45.82% growth, reaching ₹1,432 crore. This surge highlights UCO Bank’s ongoing efforts to strengthen its operational efficiency and expand its retail and MSME (Micro, Small, and Medium Enterprises) portfolios.

UCO Bank’s strong business growth in Q2 FY 2024-25

UCO Bank’s total business stood at ₹4,73,704 crore as of 30 September 2024, reflecting a year-on-year increase of 13.56%. The bank’s gross advances reached ₹1,97,927 crore, an 18% rise from the same quarter last year. The rise in total deposits to ₹2,75,777 crore, marking a 10.57% year-on-year growth, further solidified the bank’s robust position.

A significant contributor to this growth was the expansion in the retail, agriculture, and MSME (RAM) sectors. The RAM segment recorded a 20.16% year-on-year growth, with retail advances showing the highest growth rate at 29.36%. Key segments such as home loans and vehicle loans were the main drivers, growing by 18.98% and 38.66%, respectively.

Improvement in asset quality and profitability

The bank also reported a significant reduction in its Non-Performing Assets (NPA). The Gross NPA ratio dropped to 3.18% as of 30 September 2024, down from 4.14% the previous year. The Net NPA ratio also saw a decline, now standing at 0.73%, compared to 1.11% in Q2 FY 2023-24. The improvement in asset quality indicates UCO Bank’s increased focus on effective risk management and recovery measures.

In terms of capital adequacy, UCO Bank maintained a strong position with a Capital Adequacy Ratio (CRAR) of 16.84%. This figure highlights the bank’s readiness to meet regulatory requirements while continuing to grow its business operations.

Expert opinion: Driving factors behind the growth

Industry experts note that UCO Bank’s growth trajectory is primarily driven by its strategic focus on retail and MSME sectors. Analysts observe that the bank’s diversified loan portfolio, particularly in home and vehicle loans, has been instrumental in boosting profits. A banking sector expert stated that the strategic push in the RAM sectors indicates UCO Bank’s confidence in India’s growing consumer demand.

Furthermore, the reduction in NPAs reflects the bank’s proactive measures in risk assessment and credit monitoring, a move seen as crucial in maintaining financial stability amid volatile market conditions.

Network expansion and future outlook

UCO Bank continues to expand its branch network, boasting 3,247 domestic branches, with a significant focus on rural and semi-urban areas, which account for 61.60% of its branches. In addition, the bank operates two overseas branches in Hong Kong and Singapore, as well as a representative office in Iran.

The bank’s latest results demonstrate a strong recovery and growth momentum, setting a positive outlook for the upcoming quarters. With an emphasis on expanding its retail and MSME segments, along with improved risk management practices, UCO Bank is expected to sustain its growth trajectory and further enhance its profitability in the coming fiscal periods.