UCO Bank Aims To Bring Down Government Stake To 75% By Fiscal 2024-25

UCO Bank on Tuesday said it aims to reduce the government's stake in the bank from the current 95.39% to 75% in several tranches by fiscal 2024-25, to comply with the minimum public shareholding norms set by SEBI.

The lender has time until August to comply with this but it hopes to receive a further extension, a top bank official said.

Four other public sector banks have also laid out plans to pare down government holdings to meet SEBI regulations.

"We don't need equity for growth as our capital adequacy is at 16.98%. However, we must reduce the government's stake to 75% to meet listing regulations, and we aim to do so within this fiscal year. The board has approved the issuance of 400 crore equity shares for this purpose. We will execute this in tranches," said UCO Bank MD & CEO Aswani Kumar.

He said various options will be explored as issuance plans get firmer.

"To comply, the issuance of 330-340 crore equity shares at Rs 10 each would have been sufficient, but we have allowed some additional headroom," he said at a post-earnings interaction.

Speaking about the credit growth outlook, Kumar mentioned that the bank is targeting a growth of 12-14%, and corporate lending is expected to remain robust with a growth target of 3-4%.

Amid a challenging environment for deposit raising, the bank aims to maintain a CD ratio of 75% and retain a net interest margin of 2.9-3%.

The bank hasdecided to expand its branches to deepen its footprint. It plans to open 130 branches this fiscal year in areas with little or no representation.

UCO Bank's rural network coverage is 35% of its total network of 3,300 branches across the country.

Kumar also stated that the bank will invest Rs 1,000 crore in IT infrastructure this fiscal year and will modernize its treasury operations.

He revealed that the bank has recovered Rs 728 crore out of a Rs 822 crore loss due to an IMPS debit glitch in its system.

The Kolkata-based bank also reported a standalone net profit of Rs 525.77 crore for the fourth quarter ended March 2024, a decrease of 9.5% compared to the corresponding period last year, due to higher provisions for wage revision.