Calcutta, June 29: Calcutta-based Uco Bank on Thursday reported a net profit of Rs 36.64 crore for 1999-2000, its first time in the black after a record 11-year run of losses that had gained it the tag of a "weak" bank.Announcing the results for the year to March 31, 2000, executive director VP Shetty said Uco's strong showing was based on all-round improvement.Specifically, Uco achieved a higher spread, investment yield (12.83 per cent), net credit deployment, and non-interest income. All this with a marginal increase in operating expenses."This is one of the greatest achievements of the bank," an elated Shetty told reporters.
The bank, which still has an accumulated loss of Rs 1,797 crore, has gone all out to reduce its non-performing assets, recovering Rs 64.77 crore during 1999-2000. The ratio of net NPA to net advances is down to 8.75 per cent from 10.83 in 1998-99. In absolute terms, net NPA is Rs 1,651 crore, including the overseas branches.
"The capital-adequacy ratio is 9.16 per cent, a little above what is required," said Shetty, who has been heading the bank since Sharda Singh retired as chairman in January this year.
"We have requested the government for Rs 250 crore in Tier I, and another Rs 250 crore in Tier II," Shetty said.
Tier I consists of equity capital. Uco's current equity capital is Rs 2,264.52 crore, after a government injection of Rs 200 crore during 1998-99. Shetty said Uco aims to increase Tier II or debt. "A decision will be taken within the next 15 days," he said.
Like United Bank of India, the other Calcutta-based "weak bank", Uco has not made any provision for the wage hike that will arise from an industry- wide settlement for its 31,400 employees. Uco officials refused to quantify the impact, but said they were making a provision of Rs 4 crore a month since July 2000 for higher current wages. Overseas operations, especially the two branches at Singapore, was the star in Uco's total network of 1761 branches, contributing a net profit of Rs 32 crore. In the current year, Uco expects the four foreign branches to yield a net profit of Rs 40 crore.
Total income went up to Rs 2,226 crore from Rs 1,880 crore in 1998-99, while total expenditure increased to Rs 2,190 crore from Rs 1948 crore, with net interest income up 24 per cent.
Interest earned increased to Rs 1,977 crore from Rs 1,693 crore, and other income rose to Rs 249 crore from Rs 187 crore. Interest expended went up to Rs 1,425 crore in the year to March 31, 2000, from Rs 1,246 crore the previous year, while operating expenses rose to Rs 625 crore from Rs 595 crore. Provisions and contingencies increased to Rs 140 crore from Rs 106 crore.
With a profit on its books, Uco had to make certain appropriations as specified by the Reserve Bank of India. It transferred Rs 9 crore to statutory reserves, Rs 18 crore to investment revaluation reserve and Rs 3 crore to general reserves. Uco has drawn up a medium-term restructuring plan ending 2002-3, having got good results from a three-year strategic revival plan launched in 1997-98.
It is aiming at a net profit of Rs 79 crore in the current year, and Rs 319 crore in 2002-3. The current year's projection takes into account the wage hike, excluding arrear payments. Operating profit is projected to grow from Rs 227 crore to Rs 497 crore. The MTRP will be continue the focus on recovering NPA and controlling costs.
"In terms of credit growth, we would like to concentrate on the mid-market segment," Shetty said, referring to a host of loan products launched recently. Uco is also aiming for higher fee-based business. "We have been talking to various insurance companies companies," Shetty said. "We would like to be the agents".
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.