Consider credit growth of 12-15% in 2022-23; open 200 branches all over India
UCO Bank, a public sector bank, has decided to focus on “growth with sustained earnings” as the centerpiece of its strategy in the coming days, said Soma Shankar Prasad, Managing Director and CEO. To this end, the bank, which emerged from RBI’s Rapid Corrective Action (PCA) in September 2021, is now aiming to open 200 branches across India in 2022-23 and is eyeing credit growth of 12-15. %, Prasad Narrated Activity area. Prasad pointed out that the planned increase in infrastructure spending by the government bodes well for banks such as UCO Bank and that growth opportunities in 2022-23 are expected to be far greater than in the current fiscal year. He said the 12-15% credit growth target does not seem ambitious given that there are several favorable factors such as increased government spending on infrastructure and a recovery in the mortgage market. In addition, private investments are expected over the next six to eight months, thanks to increased public spending on infrastructure, he added. It is worth recalling that UCO Bank was placed under the APC by the RBI in 2017. Prasad, who previously served as Deputy Managing Director of State Bank of India, took over as CEO of UCO Bank on January 1 of this year.
No fund raising
Prasad also ruled out any capital raising in the next fiscal year and noted that it has enough capital to meet its expected business growth. “We have a capital adequacy CRAR of 14.6% and that’s quite comfortable. I see no reason why we should think about raising capital. We are not planning any capital increase over the next year,” he said. For the growth of its loan portfolio, the bank will focus on retail, agriculture and MSMEs (RAM), but it will not be high as loans in this segment are all small. “We will seek to expand our business portfolio. We will focus on good business accounts with good ratings. We are already receiving proposals in sectors such as steel for expansion and new projects. We want to focus on quality assets. Business growth is important. In terms of growth, this is important because it helps increase your turnover and at the same time increase your bottom line,” he said. UCO Bank has a loan book of ₹1.25 crore lakh, of which the retail book is around ₹75,000 crore and the rest is mostly corporate. “When the bank was in PCA, there were constraints in terms of growth. We are now focused on growth with sustainable profits. The third wave is in decline and India is on its way to becoming the fastest growing major economy in the world. We expect to end this fiscal year with credit growth of 8-10%,” he said.
In line with the changing banking ecosystem, UCO Bank is also looking to up its digitization game. “Digital expansion is important. UCO Bank is at the forefront of fintech partnerships. Most fintech solutions are already integrated into our basic banking and mobile banking software. Our mobile banking app is the highest ranked banking app in the App Store,” he said. While digital is important, so are face-to-face interactions and so UCO Bank will adopt a phygital strategy and that is why branch expansion is planned for the next fiscal year, he noted. With regard to asset quality, there has been a gradual reduction in non-performing assets. The bank plans to reduce gross NPAs by 6% by March 2022. Net NPAs are below 3%. On the business side, I don’t see any major slippages. There may be some slippage in Kisan credit cards and exposure to MSMEs. We have proactively increased our reserve coverage rate (over 90% now) and this should support any slippage,” he added. In the just-ended December quarter, UCO Bank made a net profit of ₹310 crore. Starting in March 2020, when UCO Bank made a small profit of ₹16 crore, the bank made krofits in each of the quarters. The amount of profit has increased. “We are fully confident in maintaining and improving the bottom line performance. The revenge consumption is ongoing and certainly with digital adoption on the rise, in addition to the government’s infra push, this will help us to grow robustly,” he added.
February 13, 2022