← Throughline · holding view Deep analysis ↗ Q4 FY25
UCOBANK UCO Bank · Other Q4 FY25 · concall
Pattern: credit growth guidance vs

Refused to commit on treasury profit outlook fy26.

1 deflection · 3 weak · 11 clean — pushback across 4 of 15 Q&A turns

Focused evidence 4 of 15

Ashok Ajmera · Participantweak

You have given a good target for the next year also but you have a little bit tapered down your targeted number of credits to just 12-14% as against 17.7% which you have already achieved in this quarter itself. Do you see that the demand may little bit come down or because of the geopolitical turmoil?

See, Ajmera ji, if you look at our previous year's guidance also our guidance was 12-14% in advances and deposit was 8-10% and our achievement was in deposit 11.56% and basis this achievement of 11.56%, we have given a guidance of 10-12% in deposit, right. In advances, see advances are again an opportunity based. Sometimes you get a better opportunity, better pricing, yield, then you go for it. So it will be a balanced approach towards credit growth in RAM segment and in corporate credit depending upon the margin available, depending upon the pricing which we are getting and accordingly we have kept a guidance of 12 to 14% given an opportunity, if we see the guidance as we have done in the last year also.

Ashok Ajmera · Participantdeflection

On the treasury. Now with this rate softening and even 20 basis point is just in this year itself the reduction is there and with next 2-3 rate cuts, we might go to 6, you know, like 6.1 or 6. So do we expect a good bumper profit coming in the FY 26 from the overall treasury operations, sir?

Yes sir, Ajmera ji, yes, we all are looking at that. RBI has already cut the repo rate twice 25 basis point each and now we expect as you have already said further cuts. If that happens, definitely the yields will be going down but because profitability will depend upon....because the RBI has changed the guidelines on investment last year only. So the FATPL part only will come into the profits directly and AFS part will go to there only. So we see a reasonable profit from there. We can't quantify because it is a function of the market movement. So we can't quantify but yes, we are hopeful of.... because if yields are supporting, market is supporting, definitely opportunity is there. So we are there in the market to catch the opportunity as and when it arises.

Sushil Choksey · Participantweak

On treasury, the yield will fall we'll make good money on bonds, which we are holding on AFS, HTM. What are we likely to different because we also have international presence and domestic presence that today, majority of the corporates are in a position to borrow through Gift city. Will we enhance our margins by taking some exposure on corporates, which enables for bank to perform better, Could we do something better which mismatch can be maintained?

So, yes, we are active in corporate bonds category also and we have improved our non-SLR book also, you can see. There have been several certain maturities during the year from earlier DISCOM bonds. So now we have already front-loaded our deployments in corporate bond category also because we know the yields were quite attractive earlier, before 3, 4 months back. So we have done that investment also and we will continue to see the corporate bond segment as well in our investment book other than the GSEC and SLR book. Though we have reduced our SLR book, if you see year-on-year, we have reduced our SLR book from around 25% to 23% to augment our CD ratio.

Sushil Choksey · Participantweak

How are you shaping up on the international book, similar growth opportunities or with the falling yield there is pressure there?

So in international book also, we have two branches, Singapore and Hong Kong. They are also quite active. Both in lending and as well as investment also. So we have a little book of investment overseas as well. And yields, yes, of course, the yields, falling yields, they are getting more opportunities to raise the cheaper funds also and to deploy it. Yes, the pressure is there on the margins but still we are able to get good deals into the overseas market also, both on lending side also and in investment book also.

▸ Other Q&A (11)
Amit Mishra · Participant

Our RAM share is almost 73%. So what is our ideal ratio? Are we going to 60-40 or 35-65?

See our RAM share is around 62-73% and ideal is, I think we should be somewhere 65%.

Amit Mishra · Participant

Sir, out of your total advances, how much is linked to external bench rate?

See, out of total advances, our link to, give me a second, around 50%, 55% is linked to external benchmark.

Amit Mishra · Participant

We have witnessed a really good growth in vehicle loan segment, almost 59%. So specifically in vehicle loan, which sector are we seeing, two-wheeler, four-wheeler is growing or which specific vehicle sector is growing?

The growth is in four-wheeler only. Maximum growth is in four-wheeler and actually, we have revamped our vehicle loan scheme last year. And that has given a result and our base was very low. So on a base of, with a branch network of 3,300, March 24, our vehicle loan per branch was even less than 1 crore. So now we have reached to a level of around 1.5 crore per branch. And we have also revamped our incentive scheme for the DSS also.

Amit Mishra · Participant

Sir, you mentioned you have already spent like 440 crores on IT this year. And what was it? For next year, we are targeting 1000?

600 crores. 642, 642. 1000 plus, yes.

Rohan · Participant

What is your outlook on NIM as it has declined sharply from 3.38% to 3.22% quarter in quarter? And also the yields also dropped from 9.02% to 8.9%. What's explaining this? And is this because of your deposit is largely stable?

No, no. See, last quarter, we had an interest component of around 42 crore from one of the segments that is NRLM. So that was over and above our normal interest income. And that gave us a slightly higher NIM and higher yield in the last quarter and which was not available in this quarter. So that is one. Because of that only, otherwise it is not. If you look at our yield on fund, that has improved on a Y-on-Y basis substantially.

Rohan · Participant

On personal loan. Loan book growth has been quite steep this quarter, about 10% to 11%, quarter on quarter and 46% year on year, though it is very small portion of total loan. Can you throw some color on it? Because at industry level, we are seeing degrowth. Is it, is this to ETB customers or NTB customers?

This personal loan is totally to ETB customers, number 1. And number 2, there are two components. One, over the salary account holders. 2nd is our pension account holders. We are giving personal loans to them. 3rd is our regular customers who are accounts are being operated for the last 9 to 12 months regularly and we have a criteria of average balance and minimum balance, basis that we offer them PQL facility. But we are mindful of the fact we are not going to NTB customers currently.

Rohan · Participant

What is your total gold loan portfolio and how is that book shaping up in terms of growth, sir?

See total gold line portfolio of our bank is 10,500 crore and we are all in compliance with the RBI guidelines of our gold loan portfolio also. And if you look at gold loan portfolio, the behaviour of the gold loan portfolio in last financial has been reasonably okay. There is no delinquency. We are observing that that the ticket size or anything or the NPA or the delinquencies are increasing not like that. Our gold loan portfolio's behaviour is satisfactory and growth is also reasonable.

Ashok Ajmera · Participant

Very good control you are having on the SMA. Are you feeling any pinch in the individual accounts or with this little bit of slowdown is there any impact, little bit of delinquency in our recovery this thing though the final number looks good, but on day-to-day basis, what is the experience on the recovery front, sir? And coupled with this our recovery from the return of account is also good. I think it was 964 crores in this quarter. So going forward, what is our total return of book and how much do we expect in percentage terms out of that?

See Ajmera ji, first is SMA book, if you look at our SMA book for the last 3, 4 quarters in the financial year, last financial year, this year, we are declaring more than 1 crore. Generally other banks are declaring more than 5 crore. We declare more than 1 crore on for the last maybe around 2 years now. And if you look at our book, our total SMA still continues to be in the range of 1500 crore only. So on an overall basis if you ask me from the behaviour of our book, I don't see any stress building up in any of the segments either in retail, MSME, Agri or corporate for the bank. Last year our total recovery was 4429 crores as against 3127 crores previous year and that has given us a lot of confidence. We have a book of TWO account currently also where around 23000 crore of TWO book is still there and there are certain NCLT, 18000 crore under NCLT only. Otherwise, our initial estimate was that we will recover around 3500 crores of recovery in this financial year, but since 840 crore is already come. So we expect around 2500 to 2700 crore in the next financial year overall recovery to come.

Ashok Ajmera · Participant

On the NBFC front and co-lending space, now the RBI has also little bit has become liberal saying that the non-priority sector NBFC also the banks can go for. So what are your views on that? What is our existing NBFC exposure including the co-lending? Would you like to throw some light on that, sir? What are your plans in future?

See, our existing NBFC portfolio is around 12, I think 12.5% of our total domestic advances, right. And if you look at our co-lending partnerships, we have already done around 7 co-lending partnerships and our total co-lending portfolio under this partnership is 2,200 crores. So given an opportunity in the current financial year also, we'll continue to evaluate the proposals coming to us. If we match our loan policy guidelines or we are able to modify product and base our loan policy guidelines, we can offer those products through the co-lending partnership. So we'll continue to evaluate the opportunities and then take a call basis the credentials, basis the product, basis the segment. So many things are to be seen, but we are open to look at the future partnerships in co-lending space with Fintech, with private, non-priority, whatever.

Sushil Choksey · Participant

Based on current quarter CASA which we have ended, with now falling interest regime, most of the banks have started dropping rates where deposit are concerned. What will we do differently to strengthen our CASA, which leads to a sustainable growth path and compete with larger banks?

Sushilji, if you look at our CASA, in the last financial year, if you compare CASA of other banks and CASA of our bank on a quarter-on-quarter basis, we have already given a guidance of 37 to 38, and we are well within the guidance in the current financial year, 37.91% we maintained CASA. We have done a lot of initiatives in the last financial year to garner CASA, to improve our offerings to the various walks of life, like for students, for females, for salaried customer, for non-salaried customers, for current account holders. Then another thing which we started last year, if you remember, was a Tab banking. So initially we started Tab banking with 500 branches, reached to 700,1000, 600 and then now in last March quarter we have given Tab to the entire 3000 plus branches. So now our onboarding is through digital Tab banking by reaching out to the customer.

Sushil Choksey · Participant

Sir, last question on the credit side growth. How are we seeing what is the book position in terms of sanctions which are available, which are not disbursed? How is the pipeline looking, because with whatever happening led by US direction on the trade, India may attract a lot of trading manufacturers and opportunities because a lot of goods may not get shipped from China. How are we locating or citing those opportunities in our bank or we are creating some opportunities by already talking to customers?

See Sushilji, our sanctions which are already in pipeline, which are likely to be disbursed over the period of next one year is in the range of around 10,000 crore, where we have already given sanctions and which will be availed. Again, it again depends upon a scenario, that time when the opportunity comes to lend or to borrow whatever, but we have already pipeline of around 10,000 crore in various segments which is available. So far as opportunities which we are exploring we have already looking at various lending opportunities in various actions in manufacturing also. Our teams are talking to various customers. Look on those opportunities we are open to bringing new products also to tap those opportunities. Whatever extra mile we need to go, we will definitely go.

▸ Prepared remarks (4 blocks)
Thank you. I welcome all analysts to this post results press conference. Sorry, analysts meet through Webex. Let me first share with you the highlights of our performance for the quarter ended March 25 and the financial year ended March 25. Overall business growth of the bank, bank's business grew by <strong>14.12%</strong> on a YonY basis and bank crossed 5 lakh crore business. So the total business of the bank was 530,527 crore. Deposit grew by 11.56% and saving deposits grew by 5.06%. Current deposit grew by 18.47%. We were able to maintain our CASA at 37.99%. Our advances grew by 17.72% of which retail grew by 35%. Operating home loan growth was around 18.13% and vehicle loan growth was 58.99%. Agriculture grew by 20%. Agriculture growth was well supported by improvement increase in our infra-fund, SHG and gold loan portfolio. MSME growth was 18.55%. Now coming to the asset quality, gross NPA of the bank has been reducing consistently on a quarter on quarter basis. This quarter, the gross NPA came down to 2.69%, that is a reduction of 77 bps on a YonY basis. Net NPA, again, coming down on a quarter on quarter basis came down to 0.50%, that is a reduction of 39 bps on a Y-on-Y basis. PCR of the bank has been improving on a quarter on quarter basis, 96.69%, that is up by 131 bps on a Y-on-Y basis. PCR excluding TWO portfolio also improved by 704 bps on a Y-on-Y basis to 81.95%. Profitability, our net interest income for the year improved by 18.88%. Non-interest income also improved by 34.91% on a Y-on-Y basis. NIM domestic improved by 17 bps to 3.29 bps on a Y-on-Y basis. Global NIM improved by 16 bps to 3.08 bps. Yield on advances improved by 6 bps to 8.89%. Yield on advances global improved by 9 bps to 8.55%. Our yield on funds improved from 7.89% in March 24 to 8.25% in March 25. That is an improvement of 36 bps on a Y-on-Y basis. Overall operating profit for the quarter ended, we ejected operating profit of 1699 crores, that is a 33.48% growth on a Y-on-Y basis. For the full financial year, operating profit was 6037 crores, that is a growth of 32% on a Y-on-Y basis. Similarly, net profit for the quarter ended March 25 was 653 crores with a Y-on-Y growth of 24%. For the full financial year, the net profit was 2445 crores with a growth of 47.80%. Now coming to the guidance which we have given at the start of the financial year and what is our achievement and what is our future growth outlook. Deposit growth, we have given a guidance of 8 to 10% at the start of the year. We ended the year with 11.56% deposit growth. CASA, our growth target was 8 to 10%. Our actual growth is 6.71%. That is tad below the guidance which we have given. Credit growth was 12 to 14%. Our growth is 17.72%. CASA, we have given a guidance of 37 to 38%.
We were able to maintain <strong>37.91%</strong>, that is within the guidance. RAM percentage, we have given a guidance of 60 to 62% and actually 62.73%. CD ratio, 74 to 75% was the guidance, actually 74.94%. Credit cost was less than 1% guidance, now actually 0.87%. NIM global was 3 to 3.10, actually 3.17%. GNPA is less than 3%, actual is 2.69%. Net NPA guidance was 0.65%, actually 0.50%. Slippage ratio, our guidance was 1 to 1.25%, actually 0.92%. Total recovery and upgradation of our guidance was 3,000 crore. Actual recovery and upgradation is 4,427 crore. Now coming to the growth outlook for the coming this year. Deposit growth, our outlook is 10 to 12% deposit growth. CASA growth is 8 to 10%. Credit growth 12 to 14%. CASA we would like to maintain in the range of 37 to 38%. RAM 61 to 63%. CD ratio, we'd like to maintain in the range of 77%. Credit cost, again less than 1%. NIM global 3 to 3.10. GNPA are less than 2.5. Net NPA less than 0.35 and slippage ratio between 1 to 1.25%. And recovery and up gradation 2200 to 2,700 because we have already got some large recovery, which was expected in this financial year. We have already recovered in the last financial year. As you all know, we have already successfully completed our QIP of Rs. 2,000 crore. And with that, plus with the plough back of profits of this current financial year, our CRAR has also improved to 18.49%, as it is 16.25% last quarter. CET has improved to 16.03%. Tier 1, 16.37%. So the bank is well capitalized and there is a growth capital is sufficient available with the bank. Now coming to the approvals by the board. Board of the bank has approved a recommended dividend of 3.90%, as it is 2.80% last year. Board of the bank has also recommended for raising equity or the capital raising plan by issuing 270 crore shares of Rs. 10 each face value in this current financial year. With this, if it happens at the opportune time, the government holding will come down to less than 75%. Last year in September, bank started a new project called Project Parivartan. The purpose was to create a fully digital first approach across all bank offerings and target was kept that we will be digitizing over 25 journeys in one year time. I am happy to share that in six months' time, we have already done 14 digital journeys on our mobile platform and we have kept a target of 6,000 crore of business for the digital channels. We have already crossed 6,100 crore in March itself.
Profitability, our net interest income for the year improved by <strong>18.88%</strong>. Non-interest income also improved by 34.91% on a Y-on-Y basis. NIM domestic improved by 17 bps to 3.29 bps on a Y-on-Y basis. Global NIM improved by 16 bps to 3.08 bps. Yield on advances improved by 6 bps to 8.89%. Yield on advances global improved by 9 bps to 8.55%. Our yield on funds improved from 7.89% in March 24 to 8.25% in March 25. Overall operating profit for the quarter ended, we ejected operating profit of 1699 crores, that is a 33.48% growth on a Y-on-Y basis. For the full financial year, operating profit was 6037 crores, that is a growth of 32% on a Y-on-Y basis. Similarly, net profit for the quarter ended March 25 was 653 crores with a Y-on-Y growth of 24%. For the full financial year, the net profit was 2445 crores with a growth of 47.80%. In the provisions also, we have made doubtful-three assets are already 100%, doubtful-two assets we have already made now to 90% provision.
And in unsecured substandard also, we have reached 50% provision and in substandard secured advances, it is 23%. Now coming to the financial indicators of ratios, cost of deposit, cost of deposit of the bank, which was 4.87 last quarter, now for this quarter is 4.90 but year as a whole, cost of deposit increased by 7 bps and cost of funds increased by 15 bps for the year as a whole. Cost to income ratio for the financial year 23-24 was 59.74%. Now for this current financial year, it is 56.99%. As you all know, we have already successfully completed our QIP of Rs. 2,000 crore. And with that, plus with the plough back of profits of this current financial year, our CRAR has also improved to 18.49%, as it is 16.25% last quarter. CET has improved to 16.03%. Tier 1, 16.37%.
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