UCO Bank Q3 Results: Net Profit Jumps 16% to ₹740 Crore

Introduction to UCO Bank's Strong Quarter

Kolkata-based UCO Bank announced a robust financial performance for the third quarter of the fiscal year 2026, ending December 31, 2025. The state-owned lender reported a significant 15.76% year-on-year increase in its net profit, alongside substantial improvements in asset quality and strong business expansion. These results highlight the bank's operational efficiency and its ability to navigate the current economic landscape effectively, reinforcing investor confidence.

Detailed Financial Performance

UCO Bank's net profit for the October-December quarter stood at ₹739.51 crore, a notable rise from ₹638.83 crore recorded in the corresponding period of the previous year. The bank's operating profit also saw healthy growth, increasing by 5.96% to ₹1,680.24 crore from ₹1,585.69 crore a year ago. This performance was supported by a steady rise in income. The total income for the quarter grew to ₹7,521.16 crore, up from ₹7,405.89 crore in the same quarter of the previous fiscal. Interest earned, a core component of the bank's revenue, increased to ₹6,651.84 crore compared to ₹6,219.96 crore in the year-ago period, indicating a healthy expansion in its lending operations.

Significant Improvement in Asset Quality

A key highlight of the quarterly results was the marked improvement in the bank's asset quality. UCO Bank successfully reduced its burden of bad loans, reflecting effective risk management and recovery processes. The Gross Non-Performing Assets (NPA) ratio declined to 2.41% as of December 31, 2025, from 2.91% a year earlier. In absolute terms, Gross NPAs stood at ₹5,867.25 crore, down from ₹6,081.55 crore. The Net NPA ratio saw an even more substantial improvement, falling to just 0.36% from 0.63% year-on-year. The Net NPA value decreased to ₹852.55 crore from ₹1,283.13 crore. This improvement in asset health also allowed the bank to lower its provisions and contingencies to ₹525.12 crore for the quarter, down from ₹589.51 crore in the prior year.

Robust Business Expansion

Complementing its profitability, UCO Bank reported strong growth across its business segments. The bank's total business, which includes both advances and deposits, surged by 13.29% year-on-year to reach ₹5,54,000 crore. This growth was driven by a strong performance in lending, with total advances increasing by 16.27% to ₹2,43,000 crore. This pace of loan growth outstripped the growth in deposits, which rose by a healthy 10.71% to ₹3,10,000 crore. The faster growth in advances indicates strong credit demand and the bank's proactive stance in deploying its funds effectively.

Key Ratios Signal Financial Strength

The bank's balance sheet strength was further evidenced by improvements in several key financial ratios. The Capital Adequacy Ratio (CAR) stood at a comfortable 17.43% as of December 31, 2025, an improvement from 16.25% reported in the corresponding period of the previous year, indicating a strong capital buffer. The domestic Current Account Savings Account (CASA) ratio, a measure of low-cost funds, improved to 38.41%. A higher CASA ratio helps in maintaining stable funding costs and supports profitability. Furthermore, the Credit-Deposit (CD) Ratio climbed to 78.61%, up from 74.45% a year ago, underscoring the bank's increased efficiency in lending out its available deposits.

UCO Bank Q3 FY26 Performance Highlights

Market Reaction and Outlook

The strong set of numbers was received positively by the market. Following the business update, shares of UCO Bank responded favorably, closing at an intraday high. This reaction reflects investor confidence in the bank's growth trajectory and its strengthening financial health. The consistent performance across profitability, asset quality, and business growth positions UCO Bank well for the future. The results suggest a solid operational framework capable of capitalizing on the ongoing economic recovery.

Analysis of Performance

The third-quarter performance underscores several strategic strengths. The ability to grow loans faster than deposits points to robust credit demand in the economy and the bank's success in capturing this demand. The significant reduction in NPAs, coupled with lower provisioning needs, directly contributes to higher net profits and showcases a disciplined approach to lending and recovery. Moreover, the improvement in the CASA ratio is crucial for sustaining healthy Net Interest Margins (NIMs) in a competitive environment. The strong capital adequacy provides a solid foundation for future expansion without the need for immediate capital infusion.

Conclusion

UCO Bank's third-quarter results for FY26 demonstrate a well-rounded performance characterized by strong profit growth, a healthier balance sheet, and robust business expansion. The bank has successfully improved its asset quality while expanding its loan book, a combination that signals sustainable growth. With a strong capital base and improving operational metrics, UCO Bank appears well-equipped to continue its positive momentum and enhance shareholder value in the coming quarters.