UCO Bank Q4 FY26 Earnings Analysis

- Credit growth target for FY26 is maintained at 12-14%, despite already achieving ~11% in 9 months, reflecting stable and consistent growth expectations. - Retail advances, especially RAM (Retail, Agriculture, MSME), are expected to grow strongly with 20%+ quarterly growth trend continuing. - Car loans have witnessed 70% growth, with revamped product offerings fueling demand. - Agriculture loans and MSME segments are growing at 20-24% per quarter, driven by improved underwriting and service delivery. - International book deposits and advances continue to grow steadily at 18% and 12% respectively, with opportunities in overseas markets but subject to pricing and profitable margins. - Growth in salaried accounts is expected to accelerate due to new government salary packages adopted by the bank. - Pipeline of ₹8,000-₹9,000 crore unavailed corporate credit indicates potential near-term credit volume expansion. - Overall business growth increased 13.25% YoY with healthy CASA and deposit growth supporting further scaling.

- The bank expects stable and consistent performance in upcoming quarters, aiming to meet investor expectations. (Page 24) - Credit growth is targeted conservatively at 12-14% for the full year, though recent quarters have surpassed this, with Y-O-Y quarterly growth over 15%. (Page 6) - Growth is primarily driven by the RAM (Retail, Agriculture, MSME) segment with strong performance in vehicle loans (~70% growth), education loans, and MSME products. (Page 14) - Digital initiatives have led to ₹15,000+ crore of digital business, reducing costs and enhancing margins, supporting future profitability. (Pages 14, 4) - Margins (NIM) are expected to maintain around 3% in the next year, depending on repo rate cuts and liquidity conditions. (Page 24) - The bank’s cost-to-income ratio and quality of service improvements indicate efficiency gains aiding profit growth. (Page 15) - Overall, steady earnings growth with improving margins and credit growth is anticipated. (Pages 24, 6, 14)

- IT and digital spend for the current year was budgeted around ₹1,100 crore, with over ₹700 crore already spent. - Next year's IT budget is planned in the range of ₹800-₹1,000 crore, focusing on ongoing and new digital initiatives. - Key projects include omni-channel experience, Forex travel card, supply chain finance, Cash Management Services (CMS), CASA back office, Document Management System (DMS), and enhanced cybersecurity tools. - Plans to convert the call center into a profitable digital service hub through digital journeys and cross-selling. - Robotic Process Automation (RPA) and around 10 more digital journeys are in the pipeline under Project Parivartan. - Digital transformation initiatives are a strategic focus to improve customer service, operational efficiency, and revenue growth.

- The bank is adequately capitalized with a CRAR of more than 18% including 9-month profits. - The government currently holds a high stake at 90.95%. - There is an approved plan (board and AGM approvals) to reduce government's stake to 75% as per SEBI norms. - The bank has approval for a QIP (Qualified Institutional Placement) of up to ₹2,700 crore. - The government is planning to reduce stake through Offer for Sale (OFS); this has already happened in 2 banks with others in the pipeline. - At the right and opportune time, the bank will come to the market for QIP capital raising. - No immediate firm plan on timing or quantum of QIP is disclosed as decisions depend on market conditions.

- Corporate credit unavailed amount is around ₹4,000-₹5,000 crores. - Pipeline for corporate credit is approximately ₹8,000-₹9,000 crores. - Total available credit in the corporate segment sums up to ₹10,000-₹12,000 crores. - Utilization includes sanctioning new loans, replacing low-yielding advances, and expansion within existing client relationships. - The credit pipeline is assessed on a case-by-case basis to ensure bankability and profitability.