This article first appeared on GuruFocus .
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Business Growth:13.25% year-over-year increase.
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Deposit Growth:10.64% increase, with CASA deposits growing by 11.49%.
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Advances Growth:16.74% increase, driven by RAM segment growth of 25.86%.
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CASA Ratio:Improved by 44 bps to 38.41%.
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Capital Adequacy Ratio:17.43%, with Tier 1 capital at 15.41% and CET1 at 15%.
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Credit-Deposit Ratio:Improved to 78.56% from 65% in March '23.
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Operating Profit:INR 1,680 crore, a 6% year-over-year growth.
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Net Profit:INR 739 crore, a 15.65% year-over-year growth.
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Net Interest Income:Grew by 11.27% year-over-year.
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Net Interest Margin:Improved to 3.08% globally and 3.27% domestically.
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Cost-to-Income Ratio:Improved to 52.20%, a 330 bps reduction year-over-year.
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Return on Assets:Improved to 0.83% from 0.71% last quarter.
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Fee-Based Income:Grew by 30% year-over-year.
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Gross NPA:Improved to 2.41% from 2.91%, a 50 bps reduction year-over-year.
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Net NPA:Improved to 0.36% from 0.63%, a 27 bps reduction year-over-year.
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Provision Coverage Ratio (PCR):Improved to 97.32%.
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Slippage Ratio:Improved to 0.85%.
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Recovery:Total recovery of INR 2,215 crore for the 9-month period.
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Business Per Employee:Improved to INR 26.12 crore from INR 23 crore in December '24.
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Business Per Branch:Improved to INR 166.32 crore from INR 149.74 crore last year.
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Liquidity Coverage Ratio (LCR):Maintained at 112%.
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Release Date: January 20, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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UCO Bank ( BOM:532505 ) reported a strong business growth of 13.25% year-over-year, driven by a 10.64% increase in deposits and a 16.74% rise in advances.
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The bank's CASA ratio improved by 44 basis points to 38.41%, maintaining a consistent range of 37% to 38% over the past several quarters.
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Net profit for the quarter grew by 15.65% year-over-year, reaching INR739 crore, while net interest income increased by 11.27%.
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Asset quality showed improvement with gross NPA reduced to 2.41% from 2.91% and net NPA down to 0.36% from 0.63%.
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Digital transformation initiatives have been successful, with over 50% of fixed deposits and loans against FDs processed digitally, and mobile banking users increasing fourfold over two years.
Negative Points
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Despite strong credit growth, the corporate segment showed muted growth due to pricing issues, particularly with a reduction in PSU exposure.
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The bank's treasury income contribution has been declining, raising concerns about its impact on overall profitability.
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There is uncertainty regarding the full impact of the new labor code on employee costs, though it is expected to be insignificant.
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The bank's international book faces challenges in maintaining profitable margins due to competitive pricing pressures.
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A significant portion of the deposit book, around 75%, has been repriced, which may impact future net interest margins if interest rates change.
Q & A Highlights
Q: With UCO Bank achieving a significant credit growth of almost 11% in nine months, why not revise the overall year's credit target? A: Ashwani Kumar, CEO, explained that while the bank has been growing consistently, they prefer to maintain a conservative guidance of 12% to 14% due to muted growth in the corporate segment and pricing issues. Despite surpassing targets, they aim to keep growth within a reasonable margin.
Q: What is the estimated total quantum of ECL provisioning, and will UCO Bank complete it within the stipulated time? A: Ashwani Kumar stated that the estimated ECL requirement is between INR 2,500 crore to INR 3,000 crore. With 50% already provisioned, the bank aims to meet the requirement by June 2027, potentially not needing the full five-year period.
Q: How significant is the impact of the new labor code on UCO Bank's financials? A: Ashwani Kumar noted that the impact is very insignificant, with costs not exceeding INR 25 lakh, due to a small number of contractual employees.
Q: Is there any plan for capital raising given the high government holding in UCO Bank? A: Ashwani Kumar mentioned that while the bank is adequately capitalized, they have approvals for a QIP of INR 2,700 crore to reduce government holding to 75% as per SEBI requirements, and will proceed at an opportune time.
Q: What is the outlook for UCO Bank's treasury income and its contribution to profitability? A: Ashwani Kumar explained that the treasury book is maintained at a constant level, with cautious investments and liquidations. The bank does not foresee challenges in treasury income, expecting stable contributions.
Q: How does UCO Bank plan to sustain its NIM, which improved to 3.08%? A: Ashwani Kumar expects the NIM to remain in the current trajectory, as deposit rates are still high compared to repo rate reductions, supporting stable margins.
Q: What is the status of UCO Bank's international book and future growth prospects? A: Ashwani Kumar reported steady growth with an 18% increase in overseas deposits and 12% in advances. The bank is cautious with lending, focusing on profitable margins amidst pricing challenges.
Q: What percentage of UCO Bank's deposit book has been repriced, and what is the NIM outlook for FY27? A: Ashwani Kumar stated that 75% of the deposit book has been repriced, with the remainder expected by Q1 FY27. The NIM is projected to remain around 3%, contingent on repo rate changes and liquidity conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
