UCO Bank Q2 Results: Profit Jumps 27% As NII Tops Rs 2,800 Crore; Asset Quality Improves

State-owned UCO Bank on Thursday reported a 26.8% year-on-year rise in standalone net profit to Rs 786 crore for the quarter ended September 2026, compared with Rs 620 crore in the same period last year. Lower tax outgo and steady growth in core income helped to lift the bottom line.

Net interest income, the difference between interest earned and interest expended, grew 14% to Rs 2,886 crore from Rs 2,533 crore a year ago. Operating profit rose 16.1% to Rs 1,872 crore from Rs 1,613 crore.

The bank's asset quality improved further during the quarter. Gross non-performing assets (NPAs) fell to 1.96% of gross advances from 2.08% in the June quarter and 2.56% a year ago. Net NPAs declined to 0.18% from 0.25% sequentially and 0.43% a year earlier. The provision coverage ratio stood at 98.36%, compared with 96.99% a year ago.

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Provisions and contingencies, excluding tax, rose to Rs 808 crore from Rs 588 crore in the year-ago quarter and Rs 235 crore in the previous quarter. Much of the increase came from forward-looking expected credit loss provisions, which the bank raised to Rs 1,607.6 crore as of September 30 from Rs 1,037.6 crore at the end of June. Provisions for bad loans stood at Rs 444 crore.

Tax outgo fell to Rs 279 crore from Rs 405 crore a year ago after the bank opted for the lower tax regime under Section 115BAA from FY27. As a result, pre-tax profit grew a more modest 3.9% to Rs 1,065 crore.

Sequentially, net profit rose about 20% from Rs 656 crore. The June quarter had carried a one-time charge of Rs 1,237 crore from remeasuring deferred tax assets under the new regime. Operating profit was down 33% quarter-on-quarter. Other income nearly halved to Rs 888 crore from Rs 1,686 crore, as recoveries from written-off accounts dropped to Rs 301 crore from over Rs 1,000 crore in the first quarter.

On the balance sheet, advances grew 25.2% year-on-year to Rs 2.83 lakh crore. Deposits rose 14.4% to Rs 3.50 lakh crore.

The capital adequacy ratio stood at 18.85%, up from 17.89% a year ago but slightly lower than 19.03% in June. The common equity tier-1 ratio was 17.06%.

For the half year ended September, net profit rose 17.5% to Rs 1,442 crore from Rs 1,227 crore.

After the results were out, UCO Bank shares rose 3.5% to Rs 24.8 apiece on the NSE, but quickly pared the gains to marginally slip into the red. At 1:48 pm, it was trading 0.05% lower at Rs 23.91, as against a 1.8% rise in the benchmark Nifty 50.

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