Home Business UCO Bank net down 23% at ₹502.83 cr on provisioning towards wage revision

UCO Bank net down 23% at ₹502.83 cr on provisioning towards wage revision

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UCO Bank net down 23% at ₹502.83 cr on provisioning towards wage revision

State-run lender UCO Bank on Wednesday reported around 23 per cent year-on-year decline in its net profit at ₹502.83 crore for the third quarter this fiscal due to around ₹277 crore provisioning towards wage revision arrears.

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The Kolkata-based lender had posted a net profit of ₹652.97 crore in the third quarter last fiscal. The net profit witnessed a 25.18 per cent increase on a quarter-on-quarter basis during the period under review from ₹401.67 crore in the second quarter of this fiscal.

The additional provisioning towards wage revision dragged down the bank’s operating profit by 17.34 per cent y-o-y to ₹1,119.14 crore in Q3FY24 from ₹1,353.91 crore in Q3FY23, according to stock exchange filing.

“This quarter we have provided for the staff cost. There was only ₹20 crore wage revision provision in the third quarter last fiscal. This quarter we have provided for ₹277 crore. This is basically for staff wage revision signed and agreed upon,” UCO Bank Managing Director and Chief Executive Officer Ashwani Kumar told reporters after declaring the results.

During the quarter under review, net interest income (NII) rose marginally by 1.44 per cent y-o-y at ₹1,988.07 crore against ₹1,959.86 crore for the same period last fiscal. The bank’s domestic net interest margin (NIM) stood at 3.03 per cent. “Our endeavour will be to maintain the NIM at around 3 per cent for domestic and at 2.84 per cent for overall,” the MD said.

  • Also read: Indian Banks posts 52% rise in Q3 net profit on higher income, lower provisions

During the third quarter, gross advances increased by 18.63 per cent y-o-y, while total deposits grew by 5.38 per cent.

The lender’s asset quality improved during Q3FY24. Gross NPA ratio reduced by 178 bps year-on-year to 3.85 per cent as on December 31, 2023 whereas net NPA ratio fell 68 bps y-o-y to 0.98 per cent during the period.

IMPS issue

Asked about the incident of certain account holders of UCO Bank receiving “erroneous credits” via immediate payment service (IMPS), Kumar said, “We have so far recovered 87-88 per cent of the total money received by our customers. Out of total ₹820 crore received, ₹715 crore is already recovered. Around ₹105 crore is only remaining for which we have also made provisions. Our teams are following up with all the customers of our bank.”

“Recovery is coming gradually and we hope that we will be able to recover the remaining amount as well,” he added.

The Kolkata-based lender had earlier observed that certain transactions initiated by accounts holders of other banks had resulted in credit to its account holders without actual receipt of money from these banks during November 10-13, 2023.

Following the issue, the bank had made the IMPS channel offline as a precautionary measure. The bank had clarified that the incident happened due to an internal technical issue, and there was no issue with the IMPS platform.