UCO Bank shocks with NPAs

UCO Bank truly shocked everyone with its Q4FY17 performance, especially the fast deteriorating asset quality; in fact the worst in the sector as of now.

The Bank continues to make losses – its net loss for the quarter was at Rs.588 crore – only solace is that it has come down from Rs.1715 crore loss of previous Q4. Net Interest Income was also down – 35% (YoY) lower at Rs.609 crore.

The Bank’s NPAs are worrisome – Gross NPA remains high at 17.12%, marginally lower than 17.18% in sequential quarter. Net NPA is at 8.94% v/s 8.99%. The NPAs look like something out of a third world country bank!  Its provisions stand at Rs.1577 crore up from Rs.914 crore in Q3 but lower than Rs.2805 crore in previous Q4.

RBI too is alarmed with UCO Bank’s NPA. It has initiated Prompt corrective Action for UCO Bank in view of high net NPA and negative RoA (return on assets) – similar to actions initiated against IDBI Bank.

RBI has put restriction on Bank’s lending norms, culled branch expansion plans and also put a check on management and directors’ salaries.

Not surprisingly, UCO Bank is currently the top loser on the BSE, down over 5.5% at Rs.39 levesls. Its 52-week low stands at Rs.29.50.