The state-owned UCO Bank reported an 8.1% year-on-year rise in net profit for the first quarter of FY27, aided by robust growth in net interest income, lower provisioning and continued improvement in asset quality.
The lender posted a net profit of Rs 656 crore for the quarter ended June 30, compared with Rs 607 crore in the corresponding period last year.
The earnings were supported by a sharp decline in credit costs, with provisions falling to Rs 235 crore, down from Rs 616 crore a year earlier and Rs 326 crore in the preceding quarter.
Net interest income (NII), a key measure of a bank's core lending business, increased 17% year-on-year to Rs 2,808 crore from Rs 2,403 crore, reflecting healthy growth in interest-earning assets and improved lending margins.
UCO Bank's asset quality strengthened further during the quarter.
Gross non-performing assets (GNPA) declined to 2.08% from 2.17% in the March quarter, while net NPAs improved to 0.25% from 0.27%, indicating continued progress in recoveries and lower stress in the loan book.
Margins also expanded, with the bank's global net interest margin (NIM) improving to 3.05% from 2.96% a year ago.
The domestic NIM rose to 3.24% from 3.18%, suggesting better profitability from its domestic lending operations.
The quarter's performance reflects a combination of stronger core income, improving margins and lower provisioning requirements, helping the public sector lender deliver steady earnings growth despite a challenging interest-rate environment.
The continued decline in bad loans and improvement in profitability metrics also point to strengthening balance-sheet fundamentals as UCO Bank enters the new financial year.
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