Kolkata-based UCO Bank has posted a 19-per cent growth in net profit at Rs102.56 crore during the fourth quarter of the last financial year compared with Rs85.99 crore in the corresponding period last year. Better recovery and a rise in interest income led to the profit growth in the quarter, said S K Goel, chairman and managing director of the public sector bank, on Friday.

For the fiscal year 2008-09 the bank posted a net profit of Rs558 crore compared to Rs.412 crore last fiscal. "Domestic operation contributed Rs466 crore to the net profit and rest came from overseas operations," S K Goel, chairman and managing director of the public sector bank, said at a press conference.

The net non-performing assets (NPA) in the fourth quarter were down 25.60 per cent at Rs812.67 crore from Rs1,092.30 crore last year. Its net NPA was 1.18 per cent in the quarter, while gross NPA was 2.21 per cent at Rs1,539.50 crore against Rs1,652 crore in the corresponding period last year, down 6.80 per cent.

The bank made a total provisioning of Rs217 crore in the quarter compared with Rs255.12 crore in the corresponding quarter last year. It made a provision of Rs50 crore against advances by way of credit linked notes (CLNs) amounting to Rs101.44 crore, said Goel. It also made a provisioning for Rs 50 crore towards staff arrears.

Its total interest income in the quarter jumped 26.83 per cent to Rs2,165 crore against Rs1,707 crore in the same quarter last year. Other income in the quarter was Rs356.30 crore against Rs275.10 crore in the corresponding period last year. Net interest margin (NIM) in the period was 1.75 per cent, against 1.80 per cent last year.

Goel said he expects NIM to be around 2.20 per cent in the coming year as deposit rates have started declining.

Total income of the bank increased to Rs 2,520.62 crore during the quarter from Rs 2,053.29 crore last year. The capital adequacy ratio of the bank stands at 11.93 per cent.

The bank's deposits grew by 25.42 per cent during the quarter to Rs1,00,221 crore while advances grew by 25.24 per cent to Rs66,669 crore. The bank is eyeing a 20 per cent growth in business during next year, making it a Rs200,000 crore entity.

Operating profit of the bank in the quarter was Rs327 crore against Rs326 crore in the corresponding quarter last year.

Interest rate cut likely
Goel said the bank is likely to reduce interest rates this month. "We are looking at further reduction in PLR by 50 basis points, and a similar cut in deposits rates too," he said.

The bank will also go for a follow-on public offer this year, amounting to Rs135 crore.

The bank is planning to set up a "virtual banking unit" in Dubai by entering into an equal joint venture with a correspondent bank in Dubai, which will seek the regulator's nod there.

"It will be a joint venture project, where the infrastructure will be provided by the partner company and the technical expertise will be ours," Goel said, though he refused to divulge the name of the partner. "The business income will be shared on 50:50 basis," he added. 

UCO Bank already has two branches each in Hong Kong and Singapore and representative offices in Kuala Lumpur in Malaysia and Guangzhou in China.