UCO Bank Post Earnings Conference Call Summary
Notice of Transcript
• Transcript of the call held on July 22, 2024, is available on the bank's website.
• Notice signed by Vikash Gupta, dated July 26, 2024.
Key Highlights from Q1 FY25 Earnings Call
• Performance Metrics:
• Total business growth: 11.46%
• Deposits increase: 7.39%
• Advances rise: 17.64%
• Gross NPA reduced to 3.32%
• Net NPA reduced to 0.78%
• Net profit increased by 147% to ₹551 crores.
• Initiatives:
• IT upgrades and new products for women and MSMEs.
• Enhanced customer service measures.
• Staffing plans and ongoing digital initiatives discussed.
Key Discussion Points


Recovery from Written-off Accounts:

Written-off accounts: ₹27,000 crores, with ₹19,000 crores in NCLT.
New special OTS scheme to enhance recovery efforts.



Impact of RBI Policy Changes:

₹751 crore decrease in general reserves due to RBI policy changes.
No negative impact on net worth or capital adequacy ratio.



Deposit Growth and NBFC Portfolio:

Targeting credit growth of 12-14% and deposit growth of 8-10%.
Focus on enhancing CASA and retail term deposits.



Overseas Operations:

Growth in overseas deposits and advances.
Strategy includes primary and secondary syndication for favorable NIMs.



Management Responses to Participant Questions
• Addressed concerns about SMA zero accounts and securities receipts.
• Discussed decline in yield on advances and rise in investment yields.
• Emphasized cautious approach to high-cost deposits and deposit mobilization.
Future Initiatives and Strategies
• Focus on enhancing profitability and cross-selling opportunities, especially in eastern India.
• Expansion of co-lending initiatives beyond MSME to retail and agricultural segments.
• Plans to reduce government ownership below 75% through equity share issuance.
Performance of Paschim Banga Gramin Bank
• Turnaround from losses to profitability, contributing approximately ₹4 crores to UCO Bank's consolidated numbers.
Conclusion
• Management highlighted ongoing initiatives for project funding and expected strong portfolio growth in the next 6 to 9 months.
• Emphasis on IT and cybersecurity improvements, along with significant digital transformation planned for the upcoming year.

UCO Bank Analysts/Investors Meet Summary
Communication Details
• Date of communication: May 3, 2024
• Transcript of meeting held on April 30, 2024
• Compliance with SEBI regulations
• Digital signature by Vikash Gupta
Q4 FY24 Results Highlights
• Total business growth: 9.5% to ₹4,50,000 crore
• Deposits increased by 5.53%
• Advances increased by 15.62%
• Significant growth in retail advances:
• Home loans: 21%
• Vehicle loans: 31%
• Operating profit rose by 5.43% to ₹4,576 crores
• Net profit decreased to ₹1,654 crores from ₹1,862 crores
• Improved asset quality:
• Gross NPA: 3.46%
• Net NPA: 0.89%
• Capital adequacy ratio: 16.98%
• Declared a dividend of 2.8% (first in nine years)
• Focus on digital transformation and operational efficiency
Investment Book Reclassification
• Effective April 1, 2024, per RBI guidelines
• Categories: Held to Maturity (HTM), Available for Sale (AFS), Fair Value Through Profit and Loss (FVTPL)
• Minimal impact on balance sheet; most investments in HTM and AFS
• Insulation of profit and loss statement from market volatility
Return on Assets (ROA) and Provisions
• Current ROA: 0.56%
• Aim to improve ROA gradually; 1% target by FY25 may be challenging
• Proactive provisions for Expected Credit Loss (ECL) guidelines
Analyst Questions and Responses
• Impact of post-COVID implementation on asset quality metrics
• Bad loan recovery income contributing to net interest income (NII): ₹110 crores
• Future recovery expectations: similar to current levels
• Investment strategy under new guidelines: HTM investments stable at 75-80%
• Operating expenses and provisions discussed
Risk-Weighted Assets (RWA) and Digital Transformation
• Focus on market RWA; most investments in government securities
• Quarterly mark-to-market assessments for AFS portfolio
• Digital banking enhancements and CASA growth strategies
• Current CASA ratio: 39%
Corporate Bonds and Future Outlook
• Increased investments in non-SLR corporate bonds for better yields
• Average yield on corporate bonds: 7.8-8%
• Modified duration of AFS book: approximately 3.1 years
• Commitment to continuous improvement and operational efficiency
Conclusion
• Meeting concluded with gratitude expressed by participants
• Emphasis on UCO Bank's commitment to growth and transformation initiatives

UCO Bank Analysts/Investors Meet Summary
Meeting Overview
• Date: February 2, 2024
• Compliance with SEBI regulations
• Key participants: MD & CEO Ashwani Kumar and senior management
Q3 FY24 Performance Highlights
• Total Business Growth: 10.46% YoY
• Deposits: Increased by 5.38%
• Gross Advances: Increased by 18.63%
• Operating Profit: Rs. 1,119 crore (14% increase QoQ)
• Net Profit: Rs. 503 crore (25% increase QoQ)
• Asset Quality:
• Gross NPA: 3.85%
• Net NPA: 0.98%
Strategic Focus Areas
• Digital Transformation: Enhancing infrastructure and digital product availability
• Market Positioning: Targeting RAM and corporate sectors
• Cost Management: Selective deposit approach and CASA ratio improvement
Loan and Deposit Insights
• Loan Growth Guidance: 12-13% for FY24, current growth at ~10%
• Net Interest Margin (NIM):
• Domestic: 3.02%
• Global: 2.84%
• Cost-to-Income Ratio: Above 60%, aiming for early 50s
MSME and Corporate Lending
• MSME Slippages: Stable between 150 to 200 crores
• Corporate Lending Growth: 14% with a diverse portfolio
Capital and Recovery Plans
• Capital Adequacy Ratio (CRAR): Strong at 16.94%
• Equity Capital Plans: Seeking government approval for next year
• Recoveries from Written-off Accounts: Over 600 crores this quarter
Future Initiatives
• Investment in IT: ₹200 crores in current quarter, higher budget next year
• Hiring Plans: Creating around 170 new positions
• Sector Focus: Infrastructure, iron and steel, textiles, food processing
Market Participation Strategy
• Capital Raising Options: QIPs and OFS depending on market conditions
• Corporate Bond Market: Actively exploring opportunities with a focus on high-rated bonds
Conclusion
• UCO Bank is strategically positioned for sustainable growth, focusing on digital transformation, cost management, and enhancing asset quality while navigating market conditions.

UCO Bank Analysts/Investors Meet Summary (November 3, 2023)
Meeting Overview
• Date: November 3, 2023
• Communication Date: November 8, 2023
• Participants:
• MD & CEO Ashwani Kumar
• Executive Directors Rajendra Kumar Saboo and Vijaykumar Nivrutti Kamble
• Transcript available on the bank's website
• Signed by: Vikash Gupta, Company Secretary
Q2 FY24 Results Highlights
• Total Business Growth: 10.56% YoY, reaching Rs. 4,17,145 crore
• Deposits: +6.07%
• Advances: +18%
• Key Segment Performance:
• Retail Advances: +17%
• Agriculture: +14.32%
• MSME: +20.83%
• Asset Quality:
• Gross NPA: 4.14%
• Net NPA: 1.1%
• Profitability:
• Net Interest Income: +8.3%
• Net Profit: -20% YoY
• Achieved all priority sector targets and reduced slippages
Digital Transformation and Compliance
• Discussion on digital initiatives and improvements in compliance and cybersecurity measures
Q&A Session Insights
• Return on Assets (ROA): Current ROA at 0.54, expected to improve
• Expected Credit Loss (ECL) Framework: Preparedness and forward-looking provisions in place
• Corporate Credit Demand: Focus on profitable growth opportunities despite repayment impacts
• Retail Lending Growth: Strategies targeting high-value segments and partnerships with fintechs
Operating Expenses and Challenges
• Operating expenses increased by 25% YoY, affecting cost-to-income ratio
• Concerns raised about wage provisions and advances growth compared to peers
Future Strategy
• Focus on digital transformation, cybersecurity, and technology modernization
• Emphasis on retail, agriculture, and MSME sectors while being cautious in corporate credit
• Plans for customer acquisition and improved loan processing turnaround times
Treasury Management and Market Positioning
• Increasing investment book in response to rising yields
• Aim to improve credit-deposit (CD) ratio to at least 70% by March 2024
Analyst Feedback
• Positive outlook from analysts, referencing supportive comments from banking sector officials
• Insights on margin guidance and advances book, with emphasis on maintaining current margins despite rising deposit costs
Conclusion
• Management expressed gratitude for analyst participation and reiterated commitment to sustainable growth and asset quality improvement.

UCO Bank Analysts/Investors Meet Summary
Communication Details
• Date of communication: August 2, 2023
• Meeting date: July 31, 2023
• Transcript available on the bank's website
• Signed by: Vikash Gupta
• Compliance with SEBI regulations
Financial Performance Highlights (Q1 FY24)
• Total business growth: 16%
• Deposits increased by: 10.8%
• Advances increased by: 25%
• Gross NPA improved to: 4.48% (from 7.42% a year prior)
• Net profit surged by: 80.8% to Rs. 223 crores
• Net interest income growth: 21.78%
• Improved net interest margin: 2.86%
Strategic Focus Areas
• Enhancing CASA ratio
• Digital banking solutions for streamlined account openings
• Preparing for emerging ECL guidelines with substantial provisions
Credit Costs and Operational Efficiency
• Current credit costs: ~1%, expected to remain between 1% and 1.25%
• High Provision Coverage Ratio (PCR): 94.80%
• Goal: Improve operational efficiency to boost operating profit by at least 15%
Loan-to-Deposit Ratio and Deposit Strategy
• Current loan-to-deposit ratio: 66%
• Focus on increasing low-cost deposits (CASA and retail term deposits)
Digital Transformation Initiatives
• Budget allocated: Rs. 1,000 crores for digital capabilities
• Expected implementation timeline: 1 to 1.5 years
Growth Strategy in Key Segments
• Focus on Retail, Agriculture, and MSME (RAM) segments
• Growth in housing loans (4%), vehicle loans (6%), and personal loans (5%)
• Plans to double gold loan portfolio from Rs. 5,000 crores to Rs. 10,000 crores
Analyst Suggestions and Discussions
• Suggestion to convert government equity into Tier 1 bonds
• Discussion on slippages: Increased to Rs. 512 crores, primarily from MSME sector
• Current provisions: Rs. 1,267 crores in mandated provisions and Rs. 1,000 crores in forward-looking provisions
International Banking Opportunities
• Expertise in handling accounts related to Iran and Russia
• Opening of Special Rupee Accounts (SBRA) for Russian banks
• Establishing an international division for enhanced cross-selling opportunities
Conclusion
• Optimism for future results and ongoing transformation
• Appreciation for participant engagement during the call

UCO Bank Analysts/Investors Meet Summary (February 6, 2023)
Meeting Overview
• Moderated by: Mamta Samat
• Key Participants:
• MD & CEO: Shri Soma Sankara Prasad
• Executive Directors: Shri Ishraq Ali Khan, Shri Rajendra Kumar Saboo
Financial Performance Highlights
• Growth Since 1943:
• Global business reached ₹3,94,228 crores as of December 31, 2022.
• Transition to Growth:
• Exited Prompt Corrective Action (PCA) in August 2021.
• 20.35% increase in advances.
• Gross NPA reduced from 7.89% to 5.63%.
• Highest quarterly net profit of ₹653 crores.
• Capital adequacy ratio at 14.32%.
Analyst Inquiries and Responses
• International Operations:
• Offices in Singapore and Hong Kong; plans for Gift City branch.
• International operations account for less than 10% of the portfolio.
• CASA Ratio:
• Current ratio at 38%, below industry average; initiatives to improve through digital solutions.
• Loan Portfolio Management:
• Focus on retail, agriculture, and MSME lending with a 60:40 corporate to RAM ratio.
• Treasury Income Decline:
• Rising yields affecting profit opportunities; optimism for future stabilization.
Concerns Addressed
• Iran Trade and Sanctions:
• Special vostro accounts for trade in rupees; limited transactions due to sanctions.
• Government Ownership and Capital Dilution:
• No immediate plans for dilution; considering capital raising when favorable.
• Credit Costs:
• Decreased to 0.60% due to reduced slippages.
Digital Transformation and Human Resources
• Digital Initiatives:
• Focus on innovative products and partnerships with Fintechs.
• Co-lending book at ₹1000 crores, primarily in gold loans.
• Employee Development:
• Recruitment from the market; project with BCG for performance measurement.
Lending Practices and Risk Management
• Co-lending Safeguards:
• Rigorous credit assessments and quarterly portfolio reviews.
• Interest Rate Management:
• 40% of credit portfolio linked to REPO; cautious approach to corporate lending.
Future Plans and Challenges
• Branch Expansion:
• Targeting 200 new branches by March; 85-90 already opened.
• Operating Expenses:
• Increased by 24.5% due to IT upgrades and pension provisions.
• Performance Metrics:
• Aiming for ROA of 1% and ROE of 10%.
Conclusion
• Commitment to Transparency:
• Increased interaction with analysts and investors; future detailed presentations planned.