UCO Bank Q3 Net Profit up by 206.9%

One of the mid-sized public sector banks, UCO Bank came out with its third quarter number for FY14. Bank has seen its net profit increasing by more than twice compared to the corresponding quarter of last year. Net profit for Q3FY14 was at Rs 314.53 crore against Rs 102.47 crore for Q3FY13.  The surge in the net profit was supported by increase in net interest income (NII) that increased by good 33% on yearly basis and stood at Rs 1565.75 crore for the quarter ended December 2013.

On absolute basis the asset quality of the bank remained stable on quarterly basis; however, on yearly basis we have seen some uptick. Gross non-performing assets (NPA) and net NPA of the bank has increased by 9.6% and 7.4% respectively on yearly basis to Rs 7353.3 crore and Rs 4216.55 crore while on sequential basis it remained at similar level.

In terms of percentage of gross advances the asset quality of the bank improved on both sequential as well as on yearly basis. Gross NPA and net NPA declined by 12 basis points and 7 basis points respectively on sequential basis to 5.2% and 3.06%. 

We feel deterioration in asset quality has bottomed out for the bank. Currently the shares of the bank are trading at price to book value of 0.73 times and look attractive, especially after such performance.