Good afternoon, ladies and gentlemen, and thank you for joining us for the post-results conference call of UCO Bank for 1Q FY 2025. It is my pleasure to introduce to you the senior management of UCO Bank. With us, we have Mr. Ashwani Kumar, MD and CEO, sir; Mr. Rajendra Kumar Saboo, Executive Director; and Mr. Vijay N. Kamble, Executive Director. We will start the conference call by opening remarks from MD, sir, and post which we will open the floor for any Q&A. So, over to you, MD, sir, and thank you.
Thank you. I welcome all our analysts and investors to this post-results conference call for the quarter one 2024-2025. Along with me, to my right, Mr. Saboo, our Executive Director, and Mr. Kamble, our Executive Director. Our all-top management team, including our verticals and corporate GMs, are there to interact with you. Let me just give you a brief background of our results and how we perform, and then we will be what the initiative bank is taking, and then we will be taking up the question and answers also from you. I believe that our presentation has been made available with you all, and I'll give you the major highlights of our performance during this quarter. Our total business grew by 11.46%. Our total business comprising of deposit grew by 7.39%. Advances grew by 70.64%. Out of deposit saving, deposit grew by 5.47%.
Current account grew by 22.7%, 22.79%. Our CASA share improved by 52 basis points from 38.62%. Advances, retail advances grew by 21.84% on a YoY basis. That was supported by home loan growth of 20.37% on a YoY basis, vehicle loan growth of 33.33% on a YoY basis. Agriculture grew by 19.64% on a YoY basis. MSME grew by 14.04% on a YoY basis. Our CD ratio, overall CD ratio, improved by 628 basis points to 72.07% on a YoY basis. Let me talk to you about asset quality. Our gross NPA has come down to 3.32%. That is degrown by 116 basis points on a YoY basis. Net NPA has come down to 0.78%. That is 40 basis points improvement over last year.
PCR of the bank has also improved by 88 basis points to 95.76%. Our tangible PCR also improved to 77.05%. That is up by 257 basis points on a YoY basis. Our SMA portfolio, that more than INR 1 crore, that is now INR 700 crore in one and two category.
It is 0.36% of the total standard advances. Restructured book is coming down. Total restructured book is INR 3,288 crore, of which INR 2,191 crore is COVID restructuring, and general restructuring is INR 1,097 crore. And when I talk about profitability, our net interest income grew by 12.2% on a YoY basis and 3.05% on a quarter-on-quarter basis. Our non-interest net interest income, our NIM improved, domestic NIM improved by 26 basis points to 3.29% on a YoY basis. Our global NIM improved by 23 basis points to 3.09% on a YoY basis. Our yield on advances, domestic improved by 13 basis points to 8.76%. Our yield on advances on global basis improved by 22 basis points to 8.46%. Our operating profit increased by 9.81% on a YoY basis to INR 1,321 crore in this current quarter.
Our net profit improved by 147% on a YoY basis to INR 551 crore. Our CRAR improved by 24 bps to 17.09% on a YoY basis. Our cost of deposit has come down over the last six months. In December 2023, it was 4.91. Now it is 4.79. It's a 12 bps reduction in cost of deposit. Cost of funds over six months has remained same at 4.7879. Yield on advances has improved in six months from 7.94 to 8.36. Yield on funds has improved from 7.94 to 8.36. Our yield on advances has also improved from 8.46 to 8.72% on a six-month basis. This is about the total business performance of the bank. Now I'll just highlight about the initiatives which the bank has been taking over a period of time.
Bank, as you all know, we had in the previous quarterly yearly results, we have spoken about the IT initiative, budget of INR 1,000 crore, and various projects have already been started. Around INR 270 crore of orders have been placed, and certain other projects like integrated treasury, establishment of NOC center, VM setup, and IT asset management at whitelisting, TBML software at overseas center. All these have already been started. Now we are in the process of floating RFP for SD-WAN, APM, FXPC, Omni-channel, network refresh, overseas Finacle upgradation, and security upgradation, IDPAM, RFP. So all these initiatives will be taken up in this quarter and next quarter, and we believe that by the end of this year, all these projects will be up and running in various stages.
Bank started Tab Banking previously, and now we have around 1,700 branches which are already having Tab Banking, and we propose to take to 2,000 this quarter, and by the year end, we intend to reach to all 3,000 plus branches. Bank has also introduced Green Deposit product, wherein we are offering additional incentive by way of to the retail term deposits by 20 basis points over the normal rate. Bank, to improve our CASA, we have also introduced UCO Pink Basket for our female customers, wherein saving UCO Aparajita as a saving scheme, UCO Jayalakshmi for women entrepreneurs through current account, and UCO Sanchayika as RD scheme has also been launched to support our women customers. Then we have also started various initiatives to improve our customer service, and state-of-the-art call center has already been implemented.
Now we have started customer experience cell also, wherein we are talking to the customers whose grievances were redressed, whether they are satisfied or not. That is in the process to enhance our customer journey. To support MSMEs, we have launched various new products like MSME for purchase of their office, for Rice Shellers, for Arthiyas. Co-lending tie-up has also been started with three new tie-ups with MAS Financial and certain other NBFCs. In order to strengthen our underwriting standards, we have now started the hub structure across the bank. Earlier, we had only around 20%-25% branches connected through the hub structure. Now all our branches are connected with the hubs from 1st July onwards. We have 43 retail loan hubs. We have 43 MSME and agri hubs, and we have 12 integrated hubs at certain centers where MSME and retail both are taken care.
So all these hubs have been put in place in order to enhance the underwriting standard and standardized underwriting standard across the bank. Further, to ease customer convenience, we have started new products also on digital initiative. STP journeys have been started for pension loan. STP journey is there. For top-up gold loan is there. Pledge of gold loan is there. So various initiatives have been started. We have also introduced e-vehicle product for our customers. For our education loan, we have revamped our education loan schemes to strengthen the education loan portfolio. As regards staff is concerned, the average age of our staff is around 38.5 years, and we have around 29%-30% is our female staff. And in order to strengthen, we are recruiting this year staff in our how many staff we are taking this year?
We have taken so far 305.
305. In the clerical quadrant. Customer relationship.
Clerical and.
AFO.
AFO.
AFO.
Another 125 will be planned in this.
We are also participating in all digital initiatives of RBI hub, knowledge hub also to strengthen our position there. So these are the few initiatives I thought. Let me speak in my opening address. Other things will be whatever is your queries, your observations, we'll be more than happy to address those. Thank you very much.
Thank you, sir. So we'll start the Q&A round. I'll call out the person name, and he can unmute. So our first question is from the line of Mr. Ashok Ajmera. I will request you to unmute yourself and go ahead with the question.
Compliments to you, sir. Thank you for the number.
Thank you, Ajmera.
On the profitability front, also, the net profit also has improved. Even the operating profit is good. Provisions have been kept as usual. I mean, normal this thing. Only thing, I think provision for NPA is there. If you compare from the last quarter to now, INR 396 crore. And even this fresh addition, the slippage in the NPA is also little. We thought it is tapering down. So now it is, but still it is INR 479 crore. Though your recovery from written-off accounts is good. So sir, I mean, RBI feeling is still that we need to keep providing for the NPA because our last two, three years book is very good, actually. Yes, the asset quality has increased. And our underwriting norms have also become solid and more better. So do you feel still that there is a need?
I mean, the slippage will continue and there is a need for more provisions for the NPA quarter after quarter. This is number one. Number two, the recovery from the written-off accounts is good. What is the total written-off account book of the bank? And whether you expect the same trend of recovery in the coming quarters of the year? My third question is on this change in the policy of RBI for classification of our investments. And because of that, we have taken a hit of INR 751 crore decrease in the general reserves. So if our treasury head, I mean, can explain that why such a big amount had to be, otherwise it would have been marked to market, had it not, practice would not have been changed.
So were we expecting a loss on that account if it would not have been reduced from the general reserve or is there any other reason? So this is just in my few questions now.
Okay, thank you, Ajmera ji. Ajmera ji, first question was about slippage. See, if you look at slippage from our 2023, our overall slippage ratio was 1.75%. And in next year, 2024, our slippage ratio was 1.3%. So we have been working to control our slippages on a quarter-on-quarter basis. On a yearly basis, we have come down. And if you look at slippages in this quarter, that is 1.02%. So, our target is to keep it around 1% in this year also. So that decreasing trend continues. And when we are in a lending business, when the book is also growing, slippages cannot be ruled out. Number one. Number two, provisions. We, as a precautionary measure, as a forward-looking into new guidelines which may come in times to come, in the times to come ECL.
So what we have taken, that we have provided extra provision on certain class of assets, right? And in doubtful 2 category, where our asset is more than INR 1 crore, we have provided 100% in all those assets, where doubtful 2, which are likely to go to doubtful 3. So we have provided for fully in those assets. We have provided for around 50% in D1 category also. So that is on account of increased provisioning on a prudence basis, which we have done in this quarter to increase our provision coverage ratio also and increase our tangible provision coverage ratio particularly. And as a result, our net NPA has also come down and gross NPA is also now coming down with the controlled slippages and the recovery. Third thing was, sir, recovery in written-off, we have around INR 27,000 crore of written-off book available.
And now the trend is that the low hanging fruits from the written-off book has already been recovered. Going forward, the run rate for recovery from written-off accounts may not be at the same level, but now we have to more depend upon the field ground level because small accounts are also part of the written-off accounts. Because around out of INR 27,000 crore, INR 19,000 crore is in the NCLT book. So NCLT hardcore NPAs are there, out of which there are certain under liquidation also under various stages. So going forward, it may not be the same trend, but yes, if we have strengthened our field, we have brought out a special OTS scheme also from 1st July, which will give boost of written-off recovery from the field in next quarter onwards. Third thing, sir, that is what you talked about the investment portfolio.
There is, because of that, a decrease in general reserve by INR 751 crore. Actually, it is not a decrease in the overall net worth of the bank because it is on account of recap bonds. Correct? And recap bonds, which we were earlier taking on a face value, now we have to take on a fair price value. As a result, which we were earlier deducting from while calculating CRAR, this INR 751 crore, which now we are taking to the general reserve. So when we talk about CRAR, it will not have any impact, overall impact. So that we were already taking care at the time of calculation of CRAR, now it has come in the books. It's as simple as that. Furthermore, ED can also explain.
Ajmera ji, good afternoon. Actually, we can explain it like this. Earlier, we were taking these zero coupon recap bonds of around INR 2,600 crore at face value in our investments. But as per the RBI guidelines, because these are zero coupon bonds, we have to discount it to the NPV. And accordingly, the difference was taken into account for calculation of capital. So it was being reduced, that difference amount from the capital. Now, as per the new guidelines, we have to basically fair value all the items in our investment. So we have done this fair valuation. And due to this fair valuation, the same discount which was being applied on the capital is now taken into the general reserve directly. So now the investment value has also reduced up to that extent. That is on fair value only now, not on gross value.
The difference has been taken into the general reserve. On totality, if you see, the INR 750 crore is due to that majorly. Even after taking that also, the net accretion is there, which is being added into the capital due to this new valuation method. Overall, these new guidelines are capital accretive for the bank.
Okay. So net net no effect as such a thing.
No effect.
Sir, my second question is on every bank is facing this deposit growth problem. And we are also equally facing the same, though our credit books year on year. Okay, so it's better than some of the other banks. I mean, I think it is 2.67% even in this quarter also. So how going forward in future, you continue to keep growing at the same pace of, I think your target may be around, I think, 13%-14% of the credit growth. So then how do you maintain that if the deposit mobilization is not there to that extent? Or rather, it is deteriorating. It is reducing, rather. So one on that. And secondly, our NBFC portfolio is very good. I mean, the size of the NBFC portfolio is, I think, almost about 14%. So going forward, do we continue to keep the same trend or increasing that portfolio?
What kind of yield overall we are generating from that portfolio?
See, if you are right, sir, I think credit deposit gap is a question mark on everybody's mind. Let me just take you back to our CD ratio. Our CD ratio in March 2023 was 64%. And now we have reached our last five quarters to 72%. So we are having around 26% of our SLR securities. So excess SLR securities are there. So whatever is maturing, we are using those securities also. We are using our, what you call that, refinance facility also. Because this quarter, I think we have taken around INR 900 crore of refinance also. And whatever avenues are there to raise through the TREPS market, because cost of deposit is higher, so cost of raising funds to the TREPS market is lower. So we are using TREPS market because we have excess SLR securities.
Right? We are planning to reach 75% by keeping our deposit growth of 8%-10% and advance growth of 12%-14%. We don't foresee any challenge in reaching those levels. If you look at our deposit growth this quarter, this quarter, our growth is around total global deposit is around 2%. Overall domestic deposit growth is around, again, same 1.89%. And YoY it is 5.87%. Our focus is on CASA this quarter and next quarters and retail term deposit. For that, we have launched certain schemes also. We will continue to strive for low-cost deposit and retail term deposit. We intend to reduce our dependence on bulk deposit as a matter of policy. Whatever bulk deposit was as on March 2023, now even today, we are below that level. As a percentage, we are bringing it down on a quarter-to-quarter basis.
So that we widen our base and we accordingly take stable deposit over a period of time. Second thing, sir, NBFC exposure is around 14% of our domestic advances. If you look at our figure, percentage of NBFC advances to total domestic advances is coming down on a quarter-on-quarter basis. So we intend to keep that percentage in that trend only. We don't want to increase our percentage because NBFC exposure 14%, we believe that it is reasonable. We don't want to go beyond this also. So within this range, we will keep our exposure, overall exposure.
All right, sir. Just one. On the overseas book, I mean, which grew a little faster in this quarter. So where are we putting this money into the overseas? There are Indian companies. What kind of yield are we getting on that? I mean, must be a very small, bigger amount of this, or we are getting some good handsome income from that?
See, in overseas, our book grew in both deposit also and in advances also. In advances, we are going for the primary syndication and secondary syndication also. Wherever we have reasonable NIM, so we are going for those advances. The corporates are maybe from India also or overseas also. Both types of corporates are there while entering into. For deposit, we have, if you look at on a YoY basis, our deposit grew by around INR 4,000 crore. Because while there was an opportunity in overseas, while taking into that hedging cost, the overall cost was lower than the cost of deposit, which we were able to raise domestically. We rose deposit from the overseas market previous year also and current quarter also. Because the overall cost was coming down.
As a result, you will see that in this quarter, our cost of deposit has come down from the previous quarter. Cost of funds has also come down slightly in this quarter. This is a calculated strategy that we monitor our rates, domestic and overseas, on a daily basis through our funds committee. We take a call to raise deposit from which source it is convenient and cheaper mode of deposit.
Thank you, sir. Thank you for this opportunity. If time permits, I'll come up. Thank you.
Thank you.
Thank you. Our next question is from the line of M B Mahesh. You can unmute yourself and go ahead.
Yeah, hi. Just one question. In slide 33, the SMA zero on the corporate and others has gone up from INR 366 crore to INR 1,892 crore. If you can just tell us what's happened here?
Just give me a second. Actually, SMA zero in one corporate account because that account was opened just before the fag end of the year, quarter. And there was a 1-day interest charge in that account, and that was serviced on first. So immediately thereafter, it was serviced on first. So because of that, it came around INR 1,000 crore account was there. So because of that only. As on date, it is fully recovered. And SMA one and two is less than INR 700 crore. More than INR 1 crore.
Sorry.
We are monitoring more than INR 1 crore each SMA.
Sorry, I didn't understand, sir. You're saying that the account was opened this quarter and there was an interest rate outstanding due, is it?
Yeah, it was only one-day interest because it got opened the day before the close. Immediately on first, it was serviced also because of that.
Okay. The second question is on slide number 18. The security receipts is down from INR 1,061 crores to INR 54 crores.
Yes, yes, yes. See, these security receipts have been now marked to market and in the new guidelines. Since it was already 100% provided for, so there is no impact otherwise. So only now the present market value has been taken. Fair value. So fair value has been taken. It is because of this. But since it was already provided for fully, so there is no impact on our P&L or in reserves.
Okay, sir. Done. Done. Thank you. Thank you.
Participants who wish to ask questions can raise their hand. The next question. We have one question from the chat box from Mr. Raju. He asks, "Yield on advances during the quarter declined sharply on QoQ basis. Can you please specify the reason for the same? Also, given the cost of funds have almost peaked, what is your outlook on NIM?
Yes. See, yield on advances has come down, yes. Because in the previous quarter, we had recovered from the TWO, where around INR 100 crore was part of interest income, which was previous quarter we recovered. So that was the reason that this quarter, the yield on advances has come down. By how much?
109.
109 crores.
28.
28. So there is an INR 81 crore gap in the so 26 bps is the gap. Because INR 81 crore is the net gap in total.
This is due to this one.
That is the impact because of this reason.
Okay. So the next question is from the line of Mr. Sushil Choksey. Please unmute yourself and ask your question. Mr. Choksey, you can unmute yourself and ask the question. Okay. Since we are not getting a response, our next question will be from the line of Jai Mundhra. Please unmute yourself and ask your question.
Hi. Good afternoon, sir.
Good afternoon.
Thanks for the opportunity. Sir, my question is on this yield on investment. After this new investment norms, yield on investments have gone up quite sharply. Is this because now AFS are being amortized, or there are some other reasons in the new framework as to why the yields have gone up?
Denominator effect. Yeah.
Yeah. Jai, basically, there are both the reasons. One is that our portfolio structure also we are changing. Means in last one year or so, you have seen that yields have been increasing overall. So whatever phase incremental investments are happening, that is on a little bit higher yield. So that is also helping us. And then this amortization, now the amortization is both ways. Earlier, it was only one way that the premium was to be amortized. Now the discount is also being amortized. So now that is also helping. So means in both are the reasons which has helped us to improve our yield on investment.
Denominator effect is also there.
Yeah.
Because now it has been.
Now the investment is on fair value.
Fair value, and it has our.
Instead of gross value.
Gross value.
I think it is clear to you.
Yes, sir. Clear. Thank you, sir.
Okay. The next question we have from the line of Mr. Sushil Choksey. Please unmute yourself and go ahead.
Good evening.
Good evening. Good evening, Choksey .
Congratulations for a stable result. Sir, I'm looking for based on the current deposit mobilization issues, what would be our guidance in mopping up resources and advances?
Choksey, currently our deposit growth, as you have seen, is around 7.39% on a YoY basis. Our guidance at the start of the year was 8%-10%, and advances growth was 12%-14%. Why we have given a guidance of lower deposit growth? Basically, because our CD ratio is still less than 75%. We are working towards achieving 75% CD ratio. We want to raise funds at the time when we can deploy them profitably. Currently, we have enough resources available. We have excess SLR securities, which we are using to raise resources, which is cheaper in the current scenario. We will go for deposit once we achieve around 75% CD ratio in a larger way only. Till the time we were focused will continue to be on CASA growth and retail term deposit growth.
As you see that our total CASA share in this quarter on a YoY basis has improved by 52 basis points to 38.62%, though it is below the industry benchmark. But we are able to maintain this ratio in spite of tough conditions in the deposit market. To raise deposits and to raise CASA, we have taken various initiatives. First is to onboard the quality customers for which we have launched Tab Banking, which is now available with around 1,700 branches, which we will be launching to the 2,000 branches and then to 3,000 branches in a phased manner. That is number one. Number two, we have launched a campaign to onboard our customers on the digital channel. And in one year, our onboarding, active onboarding to the digital channel for the retail savings bank customer is almost double. So what was the level in June 2023?
Now the active retail customers on mobile is double. We are targeting our current account holders also, where we are giving them. You can see in our presentation, our digital adoption in current account is also improving through sound box, QR Code. And we have a mobile corporate mobile banking app also, where also transaction flow is increasing and improving. So all these steps we are taking to tap resources to further to tap women customers. We have launched 3 innovative products as a Pink Basket for women customers also, wherein we are targeting their savings by savings account and through recurring deposit. And also, for the entrepreneurs, we have launched a current account scheme specifically for women entrepreneurs, wherein special benefits have been passed on.
We expect that these things, in addition to the initiatives which we have taken in the previous quarters and previous year by launching our resource vertical, now this quarter we are launching, we have launched zonal resource head also at the field level. We expect these efforts or these steps will enable us to enhance our CASA and improve our CASA growth in the remaining next quarters.
Sir, I have no doubt in your credit growth number of reaching 75 or exceed 75 where your CD ratio is concerned. Am I to assume that based on the current treasury yields, which are likely to play between 685 and 695, or it may go to 675 in the current quarter, are you balancing a treasury profit along with your credit growth rather than taking high-cost deposit in the first half? Is that assumption, right?
Yes, you are right. We are not going for the high-cost deposit currently. If you look at our total bulk deposit, we are still below around our March 2023 level. So we are not going for the bulk deposit. The bulk deposit is very costly currently also. Though the other rates, our call rates and our TREPS, our G-Sec rates have come down, but the bulk deposit rates still are in a very higher side. So we are not taking deposits at those rates currently. Once the rates come down, then we will start taking deposits also.
Sir, is it possible for us to reach a CASA of 40%-42% range in current year?
It will be tough given the current environment because, as you also know, there is a report also and our RBI governors are also talked about from customers are going from saving habit to the investment habit. So it is tough. But with the initiatives which we are planning, we believe that we should be able to reach in a maybe years' time if we continue our efforts in that direction very seriously. And our field is also activated. Maybe next year we will be able to reach, not in current year.
Sir, noting SEBI chairperson as well as RBI governor statement on fund getting diverted to market, stock market by retail, how are we in cross-selling or any initiative earning any profit out of Eastern India specifically where our CASA ratios are high in specifically the Eastern state where we have larger presence compared to our competition?
See, to take the benefit of all those things, we have on our app, we have a technology integration with a service provider wherein our customers can onboard for their Demat accounts, their trading account, and also for mutual fund subscription on an SIP basis. So that facility we have already integrated with our app. And all our customers have been made available so that they need not to go to any other bank for using their services. Within the bank, we have given that facility to our customers so that in turn, bank also earns something as a cross-selling of the product.
Is cross-selling fetching us INR 25 crore-INR 50 crore or it is at a nascent stage?
It's a nascent stage from the mutual fund and the broking business. It's a nascent stage because it is yet to take off in a big way.
Okay. Sir, my next question is to Mr. Saboo. How does he see treasury profit and the yield pattern behavior for the current year?
So Choksey ji, you have already told that the yields are means how they are going to behave in the near future as we all understand the current market situation. So what I can say is that because of the new guidelines by RBI about the valuation of investments, the actual profit booking plus only M2M about the FVTPL book will help us in the through the profit and loss account. Any gains in the AFS book will only go to AFS reserve. It will not means help us in the profitability part. We have surplus SLR still around 7.5% surplus SLR we are holding.
Gradually, it is reducing as we are getting the redemption and maturities or some part through market opportunity if there is any to book profit. So gradually, it will move on in that way only going forward. And if we see some better yields coming forward, if we get some more opportunity for booking of profit, that trading call is obviously will be there. So it will depend upon the market fluctuation, volatility, and various factors. So profitability of treasury through trading will be only helping us in going forward basically. So it will be in the current position, whatever we have shown, that also includes the fair value gain in FVTPL book.
I don't hope, I don't expect that to continue because once it is booked, because this is the first time, this is the first time valuation method we have applied in June quarter. Going forward, only the incremental gains will be there. So it will be not up to that level.
Sir, I appreciate that you take a few what yields I'm recommending, but what is your bank's view that is more important? I may speculate and ask any yield. That doesn't mean the bank will speculate on that basis.
So no, we have our own means treasury setup. Our dealers and our chief dealer and treasury people take a call on the market depending upon the market situation. But we don't speculate. You know we are maintaining SLR book and other investments also. But the treasury dealers take a call.
So we don't mean to speculate and we don't even give any forward guidance also because this is a market-based phenomenon which we cannot comment upon. So I think that is better left to you, like people who are operating in the market.
See, Choksey , there are two ways of looking at it. What is that one has to take a call whether they want to protect their interest earning for the future or they want to book profits. Right? So if I have to protect my interest earning for the future and probably the bank can go any bank, I'm not talking about my bank or any bank, they can go for high-yielding securities to continue in the book and keep interest earnings safe so that they will add to the profitability and operating profit in the going time. If I have a short-term vision, I can book profits also. Right? So both ways, it has to every bank will have a different strategy.
Where co-lending and digital initiatives are concerned, you may have tied up MAS and few more names as you specifically said. Is this only specific to MSME or we are looking at co-lending? So your peer banks in your size of assets and advances have started focusing on multiple partnerships. So is our technology stabilized for co-lending on a larger pie and take a book to INR 8,000 crore-INR 10,000 crore in MSME or various housing loans or affordable housing or any other segments?
See, our co-lending is not only to MSME. Co-lending arrangements are MSME also, retail also, and agri also. All three segments. Now our technology partner is well stabilized. I think now it is more than six months it is stabilized. Earlier, we have already taken them on board. There were certain initial hiccups. Now technology is fully stabilized and we are able to onboard our co-lending customers also on a regular basis.
How are you seeing the shaping of co-lending platform? Because sourcing is a big issue which the partner may be bringing on the table. And those customers can add a lot of value because once the customer is at your end, the establishing further benefits is possible. Are you seeing any traction on a bigger way, month-on-month or?
See, this is a value proposition which this co-lending model brings to the bank. Since the bank has started various partnerships, I think from the next quarter onwards, we will start reaping the benefits of this relationship with our co-lending customers who are onboarded on an individual basis. Maybe next quarter onwards, we will start reaping benefits of that relationship which we are building now.
Sir, how are you preparing for the government holding or SEBI clause on the 75% ownership? Because I hear in the street that government is reluctant to sell, whereas we need to dilute. So how is that balance going to be achieved?
See, sir, we have already taken board approval and our AGM has also approved for issuing INR 400 crore equity shares for the face value of INR 4,000 crores. And if the entire thing is done, then we will be able to reduce our government holding to less than 75%. To begin with, we have already sought approval. We have written to the government for giving approval to raise INR 2,000 crore in the first tranche. And after first, because raising that much of money in one tranche is not possible, so we will go in a tranche wise. We have already taken board approval also for publishing RFP also and for onboarding merchant bankers. And once that approval comes, we will come to the market at the opportune time for raising capital.
You are looking at fresh issue of shares, not OFS?
Yes. Currently, option with us is issuance of fresh shares only. But the option continues to be with the government for coming out with a FPO.
Sir, how are you? I see one large bank taking a lot of advantage between international and domestic and quarter-over-quarter showing some profit in treasury. Are we getting any benefit of that kind in treasury of arbitrage income?
Not too much. Not too much. We have not seen too much of arbitrage.
How is the international book shaping up, sir?
International book is growing, sir. If you see our international deposit also, we have grown on a YoY basis by 48%. What we do on a daily basis, our funds committee meets and deposit opportunities, we see whether domestically it is cheaper or overseas centers, it is cheaper, including our hedging cost. If it is cheaper there, then we go for the overseas deposit. You see that we have our overseas deposit has increased around INR 4,000 crore over in a one-year period. That is the opportunity we see always. On the credit front also, we go for the primary and secondary syndication along and also the LC Bill Discounting. But major focus is on the primary and secondary syndication where we get a reasonable return.
Sir, any word or any outlook on the associate bank where I see that there is a little turnaround for us?
Sorry, I could not understand.
This is yours.
West Bengal agreement ?
Yeah, yeah, that's right.
So that is already turned around because earlier that was into losses. Previous year, they made a profit, good profit. And current year, since their results were not audited, so we could not place those results in our but in the consolidated numbers, we have taken around INR 4 crore of.
Our share.
Our share. Our share. So but now things have changed from the previous year. Things will improve on a quarter-on-quarter basis at that level also.
Now they are compliant with capital also.
Now they are compliant with the capital also. That is also. Yes.
Yeah, I noted that. Congratulations and good wishes for the current year. If there are any further questions, I'll join back with you.
Thank you.
Thank you, sir. We have one question from the chat box from Mr. Ashlesh. He asks, please share a breakup of your NPA provision of INR 396 crore. Net NPA has declined quarter-on-quarter by only INR 150 crore. Hence, increase in provision for D1, D2, and write-off does not fully explain the INR 396 crore.
See, I have a breakup. Give me a second. Give me a second. I'm just taking from my team. Hello. Additional provision which we made? Additional provision in which segment? This question is on which segment, how much additional provision? Aging provision is how much? And substandard provision is how much? Fresh provision. Breakup of INR 396 crore.
Sir, in the meantime, we can take another question.
Yes, please. Go ahead. I'll just give you his bringing the paper. Breakup is not readily available. Just working on that.
Okay. Next question is from the line of Ashok Ajmera. Please unmute yourself and go.
Yes, sir. Thanks for giving the opportunity again for the second time. Sir, again, one question is on which we have not touched upon is on NARCL. I mean, the recovery too we have talked about overall in general the recovery. I mean, NARCL identified a good number of accounts and a good amount also. But only one account has been resolved according to you and only INR 4 crore worth of account has been resolved so far. And you are saying that 3 accounts, the bids are given, received. And there are certain, sorry, bids are for 2 and 6 are kept pending or maybe it's because of some stay or something. Can you a little bit elaborate on this entire NARCL portfolio and how do we, I mean, in our planning for the next three quarters, what do we expect recovery from it?
See, one account is already settled through NARCL during this quarter wherein we recovered INR 4 crore. Right? There are six accounts under discussion, various stages identified currently which are identified by NARCL. Out of that, six accounts pertain to our bank where we have an exposure. Right? So in two accounts, they are in very advanced stage where bids have been submitted and that is under examination. And our exposure in those two accounts is INR 121 crore. There are three accounts where it has been kept on hold temporarily because of some issues which are going on. Just give me, I'll give you that also. Because one account has already been admitted in NCLT, so NARCL has kept on hold that account. One account, there are certain discussions of OTS are also going on with the promoters, so that is on hold. And another account is also under CIRP.
These three accounts have been put on hold currently. Once those things don't materialize, probably it will be again taken up at the NARCL stage. There is one account which is under discussion, which that is our bank exposure is around INR 76 crore in that account. That is due diligence is going on. Once due diligence is over, then there will be advanced stage of giving offer and bids will be submitted. These are the six accounts where we have exposure of INR 850 crore which are under various stages.
Sir, I mean, approximately how much at what valuation we think? Anything around 25%-30% of the overall this thing or 35%-40% if you take a bank?
Currently, no idea because we don't have any idea about the offering which will be available because it is difficult to predict anything.
Okay, sir. Anyway, we'll come to know as the time goes. Sir, this Saboo ji had explained about this, you know, Sushil's question, treasury income. And now you see the treasury, the income which otherwise would have been in treasury now has become a part of the interest income, you know, the majority of it. Because now we are not showing as other income or this thing, we are showing straight away as an interest because of the change in the policy. So from INR 472 crore in the last quarter, it has come down to INR 90 crore. So what is exactly the calculation? Had the system would not have changed, had we got a similar kind of profits, the treasury income in the other income?
This is Ajmera. Will give you separately because the exact calculation I don't have currently.
Yeah, that breakup of 472 we have to see. But that means there are certain valuation gains there, which is not this time because, as I already told, valuation gains are now going into the AFS reserve only, the AFS valuation gains.
That was there in the previous quarter. Exact breakup is not available. What was the actual profit booking and what was the valuation gain? Majority was the valuation gain only that we can say. Majority amount was that only, which is not available this time. That's why the fall in the income is there.
Yeah, but it has increased the net worth there. It is added to the.
Naturally, the AFS reserve will help us in the capital calculation.
Yes, yes.
Sir, again, since the time is there, you know, this agri portfolio is facing some issues with some states coming for waiver. And are we in any way impacted by that, or do we think that other states also might come out with similar kind of an announcement? And how the bank's interests are protected, you know, from because ultimately somebody has to foot the bill. So how do we see ourselves?
See, Ajmera, if you look at the states which we are talking like.
Telangana.
Telangana, we don't have much presence in Telangana because our presence in that state is not much. Our exposure to the KCC segment is very small. It's not a number which is going to impact us so broadly. If you talk about Maharashtra, we are also again not having much presence because in West, our presence is only 10% of the business outlets. 10% branches in West, which include your Maharashtra also, Gujarat also. That much presence is not there. Their portfolio, if I look at that number, is also not so significant. These are the two states, I think, which are majorly under discussion currently.
Okay, sir. So coming on this credit advance portfolio only, I think I feel that a little aggressive on the solar, you know, alternative energy. And we have come out with some very good schemes also under that so that the automatic sanctions can take place maybe up to INR 10 crore or something. So how do you see that portfolio growing? I mean, what is our experience and performance? And are we looking at some to generate from this kind of renewable energy credits?
See, we have launched a scheme also. We are promoting and we are encouraging our teams also to fund those projects under these schemes. A lot of traction is there in the field because generally these sanctions are at field level. We expect that maybe in 6 months-9 months, we will build up a good portfolio under this scheme. We believe that this scheme is going to benefit not only the credit growth but also the economy as well.
Thank you, sir.
Thank you, sir.
Thank you, sir.
Thank you, sir.
Due to time constraints, this would be a last question. I would request MD sir for his closing remarks.
Thank you, all our analysts and investors, for sparing your valuable time to join our conference call for the quarter one results for the year 2024-2025. As a bank, we have been consistently showing our performance for the last five quarters. Gross NPA has been coming down. Net NPA has been improving. NIM is improving. Our asset quality is also improving as our restructured book is coming down. Our SMA levels are also under control. The bank is taking various initiatives to strengthen its IT infrastructure, cyber security infrastructure, and also improving its digital initiatives. We are in the process of launching our digital transformation.
Next 12 to months, we intend to go in a big way in our digital transformation by digitizing all our products, making them available on our app, internet banking, to facilitate our customers to apply to subscribe to those products at their suitability, at their choice of location where they want to. So, we will continue to improve further in the times to come and hope to make performance stable in the times to come. Thank you very much.
Thank you, sir. Thank you to the management of UCO Bank for giving Antique Stock Broking this opportunity to host the call. I would like to ask the participants.