The bank's provisions nearly doubled to Rs 741 crore, compared to a year earlier, as asset quality deteriorated. Gross non-performing asset ratio increased 170 basis points to 5.58 per cent, while net bad loan ratio rose 92 basis points to 3.15 per cent.
As of June-end, the lender's provision coverage ratio stood at 54.75 per cent.
Net interest income rose 31 per cent from a year earlier to Rs 1,364 crore, even as interest income growth remained flat. The growth in net interest income was aided by a nine per cent decline in interest expenditure; now, the bank is relying more on low-cost current account and savings account (CASA) deposits.
Net interest margin improved by six basis points sequentially, but slipped 17 basis points annually, to 2.27 per cent. "I will be happy to see our net interest margin closer to three per cent," Kaul said.
The bank recorded a Rs 234-crore profit from the sale of investments, compared with Rs 13 crore in the corresponding period last year. This helped it increase its other income 98 per cent to Rs 462 crore.
UCO Bank's advances rose eight per cent to Rs 1,28,669 crore, aided by strong growth in retail loans. As of June-end, deposits stood at Rs 1,77,050 crore, 14 per cent higher compared to a year earlier. The share of CASA deposits improved to 35.4 per cent at the end of the quarter from 25.6 per cent a year ago.
The bank ended the quarter with a capital adequacy ratio of 13.72 per cent, according to Basel-II norms.