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UCO Bank drops FPO plan for this fiscal

UCO Bank drops FPO plan for this fiscal
PTI
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First Published: Wed, Dec 01 2010. 03 03 PM IST
Updated: Wed, Dec 01 2010. 03 03 PM IST
Mumbai: State-owned UCO Bank has dropped its plan of raising capital through a Follow-on Public Offer (FPO) in this fiscal, saying it is adequately capitalised.
“There is no need for an FPO because the capital requirements have been met with funds from the Government...We will not go for an FPO in the current financial year,” the bank’s chairman and managing director, Arun Kaul, told the news agency here.
The Kolkata-headquartered bank had drawn-up plans of raising up to Rs400 crore through an FPO which would have seen the Government diluting its stake from 70% to 58.6%.
“The Government has already given me non-equity Tier-I capital that is perpetual debt in preference capital that has strengthened my Tier-I,” Kaul said, adding that the bank’s capital adequacy stands at a comfortable 13.60% presently.
The bank has gone through the cycle of bulk deposits and credit-propelled growth and will now focus on the retail and mid-corporate segments to grow, Kaul said, adding it is targeting a 20% deposit and credit growth current fiscal.
The focus will be on growing the cheaper CASA (Current And Savings Accounts) deposits to the 27-30% levels in the next 6-12 months from the current 25% through a greater stress on customer acquisition, Kaul said.
The bank’s September quarter net profits were down 42% due to concerns about the loan portfolio which led to higher provisioning, Kaul said. There will be “no surprises” on the provisioning front going forward though there will be some pressure on margins as rates are going up, he said.
Kaul said he expects to bring down the bank’s gross non-performing assets to the 2% level from the 2.39% as on 30 September, 2010, while net interest margins may slip to three per cent from the current 3.51%.
UCO Bank plans to hire a higher-than-average 2,000 people this fiscal and has also drawn-up plans to add 800 new branches to its existing 2,158 in the next two years, Kaul said.
The bank’s exposure to commercial real estate is around 5% of the loan-book and performing well while it has not lent any money to the microfinance sector at all, he said.
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First Published: Wed, Dec 01 2010. 03 03 PM IST
More Topics: UCO Bank | Capital | FPO | Public offer | Funds |