UCO Bank Q4 FY26: Growth With Better Asset Quality, and a Clear Digital Push

/n# UCO Bank Q4 FY26: Growth With Better Asset Quality, and a Clear Digital Push

UCO Bank closed FY 2025-26 with faster credit growth than deposits, continued improvement in asset quality, and a steady build-out of its digital franchise. As of March 31, 2026, global business stood at 590314 crore, up 14.95% year on year. Global advances grew 19.44% year on year to 262752 crore, while global deposits increased 11.59% to 327563 crore.

Profitability also improved. For FY 2025-26, net interest income rose to 10197 crore (up 5.89% year on year), operating profit increased to 6429 crore (up 6.49%), and net profit came in at 2768 crore (up 13.21%). For Q4 FY26, net profit was 801 crore, up 22.66% year on year.

Balance sheet momentum: advances outpace deposits

The bank’s loan book expansion was driven by domestic advances, which grew 19.91% year on year to 234384 crore. Within this, the RAM portfolio (retail, agriculture and MSME) reached 152324 crore with a share of 64.98%.

Retail advances grew 26.62% year on year to 68697 crore. Home loans were 33329 crore (up 19.11%), and vehicle loans expanded sharply to 8034 crore (up 71.12%). Agriculture advances were 37336 crore (up 26.24%), while MSME advances rose to 46291 crore (up 19.36%).

On the funding side, domestic deposits grew 10.30% year on year to 304668 crore. Domestic CASA rose 12.46% to 117752 crore and the domestic CASA ratio was 38.65% at March 2026.

A notable outcome of this faster credit growth was the rise in the CD ratio to 80.21% at March 2026.

Profitability: higher PAT, but Q4 other income volatility

For the full year, interest income rose to 26281 crore and interest expense to 16085 crore. Net interest income increased to 10197 crore.

However, Q4 showed a sharp year-on-year drop in non-interest income. Non-interest income for the Mar-26 quarter was 709 crore compared with 1392 crore in the Mar-25 quarter. The fee-based income line improved to 516 crore in Q4 (up 32.65% year on year), but this was offset by lower recovery in written-off accounts (209 crore vs 964 crore) and negative treasury income (-16 crore vs 39 crore).

Management attributed the treasury impact to mark-to-market losses on the AFS and HFT books due to yields firming up in the quarter-end period. On the call, management also stated that AFS reserves were negative 140 crore as of March 2026.

Cost control remained a positive, with the cost-to-income ratio at 52.92% for FY 2025-26 versus 56.99% in FY 2024-25.

Asset quality: GNPA and NNPA improve further

UCO Bank reported continued improvement in asset quality metrics.

At March 2026, gross NPA was 2.17% (5690 crore) and net NPA was 0.27% (702 crore). Provision coverage ratio (including technical write-offs) was 97.79% and PCR excluding technical write-offs was 87.66%.

For FY 2025-26, credit cost for the year was stated at 0.62%, and the slippage ratio for the year was 0.78%.

The SMA book (1 crore and above) also reduced in size, with total SMA of 1125 crore (0.43% of gross advances) at March 2026.

Digital adoption: Parivartan shows traction

Digital transformation remained a core theme across the investor presentation and concall. The bank reported total digital business of 25350 crore at March 2026.

Digital usage indicators expanded materially. Active mobile banking users in retail increased to 67.92 lakh at March 2026 from 43.67 lakh at March 2025. WhatsApp banking users grew to 20.73 lakh from 6.03 lakh over the same period. UPI transaction volume (remitters) rose to 9513 lakh from 7091 lakh.

Management stated that Project Parivartan, launched on January 6, 2025, had delivered 31 digital customer journeys, and that WhatsApp banking had 49 services in 14 languages.

For FY 2026-27, management listed several planned initiatives including omnichannel, cash management services, supply chain finance, robotic process automation, and a document management system.

Guidance and capital position

The presentation provided explicit guidance targets for FY 2026-27: deposit growth of 10-12%, credit growth of 12-14%, CASA of 37-38%, RAM share of 62-65%, CD ratio of 80-82%, credit cost under 0.75%, and global NIM of 2.8-2.9%.

On asset quality, management guided for GNPA under 2.00% and NNPA under 0.20%, with slippage ratio under 1%.

Capital adequacy improved to 18.61% at March 2026. The bank disclosed a capital raising plan for FY 2026-27 including equity up to 2700 crore (face value) and bond raising up to 5000 crore. On the call, management said there were no immediate plans for a QIP in the current quarter and that it would be evaluated after shareholder approval and at an opportune time.

Takeaways

UCO Bank’s FY 2025-26 performance reflects a mix of strong balance sheet growth, improving asset quality, and visible digital adoption momentum. The key swing factor remains the volatility in other income, especially treasury and recoveries from written-off accounts, which can vary sharply quarter to quarter. Management’s FY 2026-27 guidance signals a preference for steady growth, tighter asset quality thresholds, and continued investment in digital and operational capabilities.