UCO BANK 2022-23 Annual Report Analysis

Fri, 26 May

UCO BANK has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the bank during the year 2022-23.

UCO BANK Income Statement Analysis

• Interest income during the year rose 17.8% on a year-on-year (YoY) basis.
• Interest expenses were up by 21.1% YoY during the same period.
• Operating expenses increased by 15.4% YoY during the year.
• The bank's net interest income (NII) increased by 13.4% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 2.9% in FY23 as against 2.9% in FY22.
• Other income declined by 19.1% YoY during the year.
• Net profit for the year increased by 104.1% YoY.
• Net profit margins during the year increased to 10.3% in FY23 from 6.0% in FY22.

UCO BANK Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	149,813	176,505	17.8%
Other Income	Rs m	31,008	25,085	-19.1%
Interest Expense	Rs m	85,084	103,074	21.1%
Net Interest Income	Rs m	64,729	73,431	13.4%
Operating Expense	Rs m	47,763	55,109	15.4%
Pre-provision Operating Profit	Rs m	47,974	43,407	-9.5%
Provisions & Contingencies	Rs m	38,677	24,783	-35.9%
Profit before tax	Rs m	17,504	29,051	66.0%
Tax	Rs m	8,206	10,428	27.1%
Profit after tax	Rs m	8,949	18,263	104.1%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	2.9	2.9
Net profit margin	%	6.0	10.3

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UCO BANK Balance Sheet Analysis

• The bank's deposits during FY23 stood at Rs 2,493.4 bn as compared to Rs 2,240.7 bn in FY22, thereby witnessing an increase of 11.3%.
• Advances for the year stood at Rs 1,558.7 bn as compared to Rs 1,227.8 bn during FY22, a rise of 26.9%.
• Cost of deposits for UCO BANK rose 4.5% and stood at 3.8%, while yield on advances fell to 6.6%.
• The lender's investments fell to Rs 950.1 bn during the year from Rs 967.5 bn in FY22.
• Borrowing stood at Rs 205.0 bn, a growth of 51.8% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 3,007.0 bn as against Rs 2,676.6 bn during FY22, thereby witnessing a rise of 12.3%.

UCO BANK Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	234,687	256,037	9.1%
Advances	Rs m	1,227,844	1,558,702	26.9%
Deposits	Rs m	2,240,729	2,493,377	11.3%
Yield on advances	%	6.8	6.6
Cost of Deposits	%	3.6	3.8
Investments	Rs m	967,490	950,085	-1.8%
Borrowings	Rs m	135,081	205,011	51.8%
Total Assets	Rs m	2,676,593	3,007,022	12.3%

Current Valuations for UCO BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 1.5, an improvement from the EPS of Rs 0.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 26.5, stands at 15.9 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 1.2 times, while the price to income ratio stands at 1.6 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	12.5	14.8
Earnings per share (Unadj.)	Rs	0.7	1.5
Diluted earnings per share	Rs	0.7	1.5
Avg P/E ratio	Rs	17.7	15.9
Avg P/ABV ratio	Rs	0.6	1.2
Avg Market Cap	Rs	158,118	290,948
Dividends per share (Unadj.)	Rs	0.00	0.00

Ratio Analysis for UCO BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 62.5x during FY23, from 54.8x during FY22. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio increased and stood at 10.54x during FY23, from 10.12x during FY22. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): UCO BANK's capital adequacy ratio (CAR) was at 16.5% as on 31 March 2023 as compared to 13.7% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank improved and stood at 7.1% during FY23, from 3.8% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank improved and stood at 0.61% during FY23, from 0.33% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank improved and stood at 9.14% during FY23, from 5.77% during FY22. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. UCO BANK's gross NPA ratio stood at 4.8% as of 31 March 2023 compared to 7.9% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of UCO BANK was 1.3% in financial year 2023. This compared with 2.7% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	54.8	62.5
Debt to Equity Ratio	x	10.1	10.5
Loans / Deposits	x	0.1	0.1
Capital Adequacy Ratio	%	13.7	16.5
Return on Equity	%	3.8	7.1
Return on Assets	%	0.3	0.6
Return on Capital Employed	%	5.8	9.1
% of Gross NPAs	%	7.9	4.8
% of Net NPAs	%	2.7	1.3
Yield on Advances	x	6.8	6.6
Yield on Investments	x	5.9	6.0

To see how UCO BANK has performed over the last 5 years, please visit here.

UCO BANK Share Price Performance

Over the last one year, UCO BANK share price has moved up from Rs 11.2 to Rs 26.5, registering a gain of Rs 15.3 or around 136.2%.

Meanwhile, the S&P BSE BANKEX is trading at 49,960.5 (up 0.7%). Over the last one year it has moved up from 40,646.1 to 49,960.5, registering a gain of 9,314.4 points (up 22.9%).

Overall, the S&P BSE SENSEX is up 15.6% over the year.

(To know more, you can check out historical annual results for UCO BANK here and quarterly results for UCO BANK here)