UCO Bank Reports Strong Q1 FY27 Growth; Advances Rise 21% as Asset Quality Continues to Improve

What Happened ?

key details

Business Growth:

• Global business increased to ₹6,05,083 crore, up 15.53% YoY.
• Global deposits rose to ₹3,32,315 crore, growing 11.28% YoY.
• Global advances increased to ₹2,72,768 crore, up 21.18% YoY.
• Domestic advances grew 22.26% YoY to ₹2,44,487 crore.
• Credit-Deposit (CD) Ratio improved to 82.08%.

Retail, Agriculture & MSME (RAM) Portfolio:

• Retail advances increased 27.32% YoY to ₹71,549 crore.
• Agriculture advances grew 30.01% YoY to ₹38,952 crore.
• MSME advances rose 18.79% YoY to ₹47,244 crore.
• Total RAM portfolio reached ₹1,57,745 crore, accounting for 64.52% of domestic advances.
• Corporate advances increased 17.14% YoY to ₹86,742 crore.

Deposit Franchise:

• Domestic deposits increased 12.25% YoY to ₹3,14,412 crore.
• Domestic CASA deposits stood at ₹1,16,136 crore, growing 12.34% YoY.
• Savings deposits increased 11.78% YoY.
• Current deposits grew 16.23% YoY.
• Domestic CASA ratio remained at 36.94%.

Asset Quality:

• Gross NPA improved to 2.08%, down 55 basis points year-on-year.
• Net NPA reduced to 0.25%, improving by 20 basis points.
• Provision Coverage Ratio (including TWO) improved to 97.85%.
• Provision Coverage Ratio (excluding TWO) increased to 88.08%.
• Credit cost remained low at 0.39%, below the bank’s FY27 guidance ceiling. 

Operational Performance:

• Net Interest Income increased 16.86% YoY to ₹2,808 crore.
• Operating Profit surged 79.84% YoY to ₹2,810 crore.
• Global Net Interest Margin (NIM) stood at 3.05%, above the bank’s guided range of 2.8%–2.9%.
• Slippage Ratio remained at 0.63%, below the bank’s target of less than 1%. 

Government Schemes & Financial Inclusion:

• PM SVANidhi:
  • 2.05 lakh applications sanctioned.
  • ₹316 crore sanctioned.
• PM Vishwakarma:
  • 10,532 applications sanctioned.
  • ₹87 crore sanctioned.
• PM Mudra Yojana:
  • Outstanding portfolio of ₹8,915 crore.
• Priority Sector Advances reached 52.35% of Adjusted Net Bank Credit, comfortably exceeding the RBI’s mandatory target of 40%.
• Agriculture, weaker sections and MSME lending also exceeded regulatory targets. 

Note:

• UCO Bank continues to focus on high-growth retail, agriculture and MSME lending while maintaining disciplined credit underwriting, improving asset quality and expanding financial inclusion across rural and semi-urban markets.

Risk Analysis

Summary:

• UCO Bank enters FY27 with improving profitability, strong loan growth and declining NPAs. However, sustaining higher credit growth while maintaining deposit mobilisation, asset quality and recovery momentum will remain critical over the coming quarters.

Key Risks:

• Deposit growth trails advance growth, requiring continued focus on funding mobilisation.
• CASA ratio remained slightly below the bank’s FY27 guidance range.
• Gross NPA and Net NPA remain marginally above management’s long-term guidance levels.
• Recovery and upgradation during the quarter remained below the bank’s annual guidance trajectory.
• Changes in interest rates and broader economic conditions could affect margins and credit demand. 

Worst Case:

• If deposit mobilisation slows while credit growth remains strong or recoveries weaken, the bank could experience pressure on funding costs, margins and asset quality despite its currently strong provisioning position.

Risk Level: Medium

Company Commentary

• Management highlighted that the bank continues to outperform its FY27 guidance on credit growth while maintaining healthy asset quality.
• The bank reported Global NIM of 3.05%, above its guided range.
• Credit cost and slippage ratio remained below internal guidance levels.
• Management reaffirmed its focus on retail, agriculture and MSME lending while strengthening profitability, maintaining high provisioning coverage and improving operational efficiency.