UCO Bank (UCOBANK) Earnings Call Transcript & Summary

Good evening, everyone. Welcome to UCO Bank's Q1 FY '26 Earnings Conference Call. It is my pleasure to introduce to you the senior management of UCO Bank. We have with us today Mr. Ashwani Kumar, MD and CEO; Mr. Rajendra Kumar Saboo, Executive Director; and Mr. Vijay Kamble, Executive Director; and other senior management team from UCO Bank. We will have the opening remarks from the MD, sir, post which we will open the floor for question and answer. Over to you, MD, sir.

Thank you, Pranav. Thank you all, and analysts for sparing time to join the post results -- quarter 1 post results conference call. Along with me, I have our ED, Shri Saboo Ji; Shri Kamble Ji; and also our entire top management team, various vertical heads are with me. So first, I'll share a few important salient points of our performance during this quarter, and then we'll be open for your question and answers. I believe that our presentation is already uploaded and all of you have gone through the presentation. I'll give you the brief about the numbers first. Our total -- our bank's total business as of 30th of June 2025 was -- will cross INR 523,736 crores with a growth of 13.51% on a Y-o-Y basis, which includes deposit of INR 298,635 crores, with a growth of 11.37%. Advances of INR 225,101 crores, with a growth of 16.48%. Within deposits, the saving grew by 4.8% (sic) [ 4.58% ], current grew by 8.79% and our CASA was maintained at 36.91%. In advances, our RAM advances grew by 23.47%. Within RAM, retail grew by 30.73%; housing within the retail, housing grew by 17.92%; car loan, vehicle loan grew by 66.94%; agri grew by 15.46%; and MSME grew by 20.33%. Our RAM percentage to total advances was 62.97% as against 61.22% same period last year. Our asset quality, the gross NPA of the bank has been declining on a quarter-on-quarter basis and now it stands at 2.63%, a decline of 69 bps on a Y-o-Y basis. Net NPA declined to 0.45% with a decline of 33 bps on a Y-o-Y basis. PCR improved to 96.88%. The improvement is 112 bps on a Y-o-Y basis. PCR excluding TWO, that is tangible PCR also improved by 607 bps to 83.12%. Coming to profitability. The operating profit of the bank grew by 18% to INR 1,562 crores in this quarter. Net profit grew by 10% to INR 607 crores in this quarter. Our net interest income grew by 6.64% to INR 2,403 crores in this quarter. Noninterest income also grew by around 20% to 997% (sic) [ INR 997 crores ] in this quarter. Cost of deposits. Our cost of deposits was at 4.84%, whereas in the same period last year, it was 4.79%. There is an increase of 5 bps on the cost of deposits. Similarly, cost of fund also, it was 4.71% (sic) [ 4.79% ] last year June quarter. Now it is 4.73%. Yield on advances also, it was 8.76% last year same period, now it is 8.6%. This is yield on advances domestic level. Cost-to-income ratio, which was 57.23%, and quarter-on-quarter basis, it is coming down. So now it is at 54.06% in this quarter. NIM global earlier last quarter -- last year, same quarter it was 3.09%, and in March, it was 3%, now it is 2.96%. NIM domestic 3.29% same period last year, now 3.18%. Now coming to slippages. Slippages for the quarter was around INR 631 crores, slightly on a higher side than the last year, basically because of the one particular -- one mid-corporate account in the MSME segment slipped in this quarter, which was on our watch list, which we monitor on a quarter-to-quarter basis as a result. But overall slippages are within the -- our guidance of 1% to 1.25%. And sector-wise slippages, if we look at, in retail, slippages was around INR 149 crores, and agri, which was INR 91 crores and MSME INR 370 crores. So slippages -- this was slippages sector-wise. Coming to the SMA book, more than INR 1 crores. As you all know, we declared more than INR 1 crore of SMA every quarter. So SMA more than INR 1 crore is now INR 1,550 crores. And as a percentage wise, it is 0.7% of the total advances. Coming to the capital adequacy position of the bank. Bank's capital adequacy position is quite strong. We stand at 18.39%, with Tier 1 at 16.36%. Now coming to the provisions. As you all know, we have been maintaining some additional provision over and above the RBI mandated provision. We continue to hold the same provision at the same level, we have not reversed any provision and that is approximately INR 1,000-plus crores provision is being maintained in addition to the RBI mandated provision on our books. Now coming to certain initiatives, which bank has started last year, where we shared with you was the Project Parivartan. That's a digital transformation journey we started in September, and our target was to digitize around 25 journeys in one year time. I'm happy to share that till now our team has already developed 22 journeys and 8 journeys are in pipeline. I think by the end of September we'll be live with 30 journeys, 22 already live and 8 will be live more. Last year, we targeted INR 6,000-plus crores of digital business. This year, our target is INR 25,000 crores. And already we have crossed INR 8,000 crores of digital business in this current quarter. Bank introduced WhatsApp Banking also, and 43 services are active, and now we have expanded to 5 languages: English, Hindi, Bengali, Assamese and Oriya, 5 languages are -- we are regularly working to increase the services and 5 more services are in pipeline, so maybe another 3 months' time we'll be up with 48 WhatsApp Banking services. We have been focusing more on the digital adoption also. And I am happy to share that mobile banking users, which was very low, around 2 years back, so we had only 14 lakh active users. Now we have crossed 51 lakh active users as we speak. So it is around 38% of our registered mobile users are active on mobile banking now. Various IT and other initiatives were also taken, which we have already highlighted, some are more planned in this year. Now with regards to the ATM infrastructure, interoperable cardless cash withdrawal and deposit by UPI facility we are working. Unified dispute and issue resolution system we are working. To improve our robust infrastructure, an application performance monitoring software is being implemented. We are also in the process of setting up near DR at Kolkata, cybersecurity vault for enhanced cybersecurity also. To improve efficiency and cost optimization, we are now in the process of implementing centralized ForEx processing center, enterprise, DMS and CASA back office. Further, to improve efficiency, and again, cost optimization, robotic process automation is being put in place in selected areas. Then in order to identify risk and mitigate security and all these things, identity access management system is also being implemented. We launched -- we announced about the CBDC. Now CBDC is in the final stage. This quarter, we'll be going live the CBDC. All approvals and onboarding has been completed, accounts have been opened. Now this quarter, we'll see that CBDC is also live. We introduced Tab Banking last year -- full-fledged Tab Banking was launched in the month of March. Now around 35% of our accounts are open -- being opened through the Tab Banking that is being used by the branches for quality customer onboarding. To enhance our outreach, bank is being -- bank is now doing carnival on a fortnightly basis where we focus more on customer outreach in respect of agri, MSME and retail customer along with the CASA customer acquisition so that every fortnight it is being implemented now. And last year, given this initiative, we brought out various new schemes based on the requirements of our customers, around 11 new MSME schemes were launched in the last year and around [ 6 or 7 ] are additionally planned in this quarter also for bringing out -- to serve our MSME customers. With respect to HR, bank has engaged 545 apprentice and recently, bank has also taken 182 local bank officers in various parts of our country. Reward and recognition policy has also been put in place. Further, women-centric policy has been further strengthened in this current financial year. Skill development programs have been introduced for the specialized skill development of our requirements in the IT, risk, treasury, ForEx areas. To improve our customer service, we introduced Pulse alert monitoring system and that have been working fine. Now with the help of this monitoring system, we are able to identify certain new accounts and the success rate, which was initially at the start of this alert monitoring system was around 40% has reached to 88%. So whatever alert the team is getting now, 88% of the accounts are being identified and marked well in advance. Our bank is very closely working with Reserve Bank of India also for -- Reserve Bank of India innovation hub with respect to the integration of the MuleHunter and ULI also. ULI, we've already onboarded and many services we have started using, some services are in pipeline. So in this quarter, we will see that most of our services available in the ULI platform, bank will be integrated. Thank you. And this was the major -- important highlights, I will say, which I wanted to share with all our colleagues in the analyst fraternity. And I have my EDs also if they want to add anything. Otherwise, we are open for the question and answer session. Thank you very much.

[Operator Instructions] We have first question from the line of Mr. Ashok Ajmera.

Am I audible, sir?

Yes, sir.

Sir, at the outset, compliments on business growth. It is a time when others are facing problems and they are going in degrowth, you've grown well. I mean even 2% of this growth in the quarter in the overall business and 1.73% in the deposit and 2.32% in credit is really commendable in this environment. So my compliments to you and both the EDs and the top management team for the same. Having said that sir, we are a little bit lagged on the profitability front, maybe because of the margin pressures and because of that, I think the RBI rate cuts and other combination, which you can explain a little more in detail, our net profit has -- operating profit also has gone down. And eventually, I mean, accordingly, consequentially, net profit has also gone down. And one major contributor is a lesser recovery from the written-off account, I think, which is almost about INR 500 crores. Has that recovery been even a little better or equal to the March quarter, I think on the recovery from written-off account is only INR 425 crores as against INR 954 crores in the last quarter, which is a major. To somewhat -- some extent, the treasury profit has added INR 150 crores more than the last quarter, but that has been the major dampener in our profitability. But considering the business growth, we would like to hear from you the target for this year, FY '26, maybe banks are shying away from that because of the uncertainties, but we would like to have it. So this is one. Secondly, sir, there is one note on the -- Note #10 on SR, security receipts, in which because of the change in the provision guidelines of the RBI, the note says that INR 274.95 crore has been taken -- have been received in this quarter. It is received or it is provision, written -- I mean the provision is reduced or this amount is received or it's a fresh SR, what is it?

It is fresh SR.

So you say 85%, 15% must have been in cash receipt.

Yes, yes.

And this is the amount of the SR in the fresh this thing.

Yes.

Okay. Provision might have been written back in the earlier quarter itself when the regulation came, I think extra provision.

Yes.

So that clarifies this point. And one point sir, on this, I think MTNL also, we have some small exposure of I think INR 275 crores, INR 273 crores. So how much provision total has been made against that amount so far. Maybe as per IRAC norms or even more as you are saying that your floating reserves, you have got some hidden reserves still now. So whether it has been fully provided for or what is the percentage of? Then my last in this round is on the SMA-2 number. So SMA-2 numbers in this quarter has gone up from INR 66 crores to INR 696 crores. Maybe something from SMA-1 spilled over to SMA-2. So what is the status of that, sir? I mean whether some recovery has already taken place in July against that upgradation or are they still persist? And can you give some color on that kind of? And that one account, one Mid Corporate account, which you said has slipped. So how much amount of that out of the total slippage of INR 608 crores? So these are some of my questions, data points and observations, sir.

I'll go one by one. First was about the operating profit and net profit. See, if you look at -- you rightly pointed out that last year, we had a good amount of written off recovery in the last quarter, particularly, that was around INR 900 crores. If you recall that we were expecting some -- one account to be resolved in this quarter, but that recovery came in the last quarter, that was a bonus for us in the last quarter. And as a result of our recovery, written-off account was higher. Second, in last March quarter, we received -- we resolved -- which account is resolved, it had also a component of around INR 280 crores of interest income, which was booked. So if you look at my interest income during this quarter, though the advances have grown in this quarter, but interest income has come down. The basic reason for interest income coming down in this quarter from advances was that INR 283 crores, which was booked as an interest income last quarter on account of written off recovery in written-off accounts, which was not available in this account. If you discount that and these two things, you will find that with the growth of business, though there is an impact of repo cut also, but we were able to have our interest income intact during this quarter, barring if we exclude INR 283 crores of income for that quarter, right? So in spite of these two things, in spite of these two, there is a marginal decline in operating profit and net profit during this quarter. So the growth has contributed to the profitability. Though the impact can be seen in our NIM also, slight impact, I think 4 bps impact is there in the NIM also. Our cost of deposit is also coming down now. Our yield on advances also there is a slight impact. But having said so, this cost of deposits may come down further in the coming quarters because repricing of the deposits will keep on happening every quarter now. But the repo cut till now, which was probably front-ended, which we were expecting that repo cut will come in stages, so it was front ended, it had impacted slightly higher in this quarter. Maybe coming quarters, we'll have a better visibility of the things. Now coming to your targets, you asked about the visibility on the target. See, we have given a guidance of around 12% to 14% of growth in advances. And if you look at our advances have grown by 16.48%. And from where our growth has come, growth has come from our home loans, our vehicle loans, our MSME segment and our agri segment. So these are the components or the, I will say, the engines of our growth. And we -- our products are well aligned with the market. So our teams are already active. The momentum which we gained in the last year and last year, so that momentum is continuing. So we expect that we will be within our guidance of growth -- credit growth of 12% to 14% by the year-end. Deposit growth, we have given a guidance of 10% to 12%. We are -- this quarter, we are within that guidance, 11.37%, but considering the CRR liquidity, which will be available now in the next to next quarter onwards. So we may be having a surplus liquidity available. So we may have a slight cut in our deposit guidance maybe after seeing the performance in September quarter. But as of now, we are not making any cut in our guidance. So 10% to 12%, we are continuing with our guidance in that. And CASA, we have given a guidance of 37% to 38%. We are marginally lower than 37%. But we expect that the way now the market is behaving, mutual funds industry, certain cash flows are now less, so we expect certain amount to be with the bank. So we expect that we may touch again 37%. But I think this is -- this will continue to be a challenge not only for our bank, but all the banks. Third is -- SR I already clarified that SR we have received in this quarter and existing SR which are available with the bank, we are already holding the provision. We have not reversed the provision. So we think that as a note we already say that around INR 48 crores of SR are available with the bank. We will continue to hold that provision. We have not -- this INR 275 crores, we have taken as per the new norms, new guidelines, right? Third, you talked about MTNL exposure. MTNL, we are giving -- we are already having 100% provision in MTNL account. So there is no room left for MTNL account. Another was your SMA numbers. Sir, if you look at SMA, I think you're right that 66 to reach 96. Basically, this is because of the last year, if you recall that quarter was 89 days. That was not -- I think 1 day differential was there. Because of that, certain accounts, though technically, they were 2, but they were reflected in the SMA-1. So that -- if you look at overall bucket and if you look at previous quarters, like December quarter and the September quarter, you will find that overall numbers are almost in this range only, SMA-2 range only. So there is no much difference. Only this March quarter was exceptional where because of this 1-day differential, it could not -- they did not cross 60 days. So they were in the SMA-1 bucket. So that is the reason that was there. That another account which slipped that is – exposure is around INR 137 crores. So if we exclude then our slippages are in the similar range as in the last quarter. But including this also, our overall slippage ratio remains within the guidance range.

Point well taken, sir. You explained it very much in detail. Just one or two small data points. Our employee cost has come down by about INR 350 crores as compared to the March quarter, INR 1,276 crores. Similarly, our other operating expenses have also come down by almost about INR 200 crores. So what I would like to know whether this is going to be the trend for the remaining 3 quarters, maybe because March quarter needed some more spending or the subsequent quarters will be higher on salaries and the operating expenses?

See, this salary and staff expenses AS 15 provision will be in line with this quarter only for the next 2 quarters. And last March quarter, we provided for the PLI as the AS 15 provision was there. So whatever shortfall was there, that was provided for in the March quarter. So that -- and then PLI provision was also there. So in this year also, in March quarter, PLI provision will be there, INR 150 crores of PLI provision, which we kept last year in March, which we will be using this year. And in the March quarter basis, the performance that we will be getting a lesser PLI provision for this next year also. So for the next 2 quarters, I feel that this should be in line with this quarter.

Sir, if you permit just one, this RBI relaxation on asking for the collateral of below INR 2 lakh loan for -- from the agri loans and the farmers. How is it going to help us growing our book on that account because now we'll be having at least some collateral against those we can officially ask for. So what is our strategy on that? And how much -- I mean, additional growth you see because of that?

See, we have not very large presence in the South where prominently this gold loan portfolio is there. But we -- over a period of last one year, we have already built a gold loan portfolio of around INR 10,500 crores. And with this new relaxation available, I think it's going to benefit the bank and the industry as a whole because there was a lot of ambiguity or I will say clarity was not there, whether they can be classified as agriculture or they can be taken as a collateral or not because RBI guidance say below INR 2 lakh you cannot take collateral. Now having come to this clarity, so we can go at least in a big way to canvass our gold loan portfolio also in the South and in the North or East also.

If I get chance again, I'll come back again for some more discussion, but let others also have the opportunity.

The next question we have from the line of Niteen Dharmawat.

Sir, my first question is related with the return on assets, ROA. It has been hovering around 0.7% to 0.75%, and it has come down during this quarter because of the net profit. So when we will be able to see 1% ROA or crossing 1% benchmark? Does the bank have any such target management -- has any target in mind for 1% as well?

See, Niteen, if you look at our gross NPA and net NPA, we have been consistently coming down and our net NPA stands at around INR 998 crores only, INR 1,000-odd crores. So going forward, except that slippage, one additional account this quarter happens, the slippages are likely to be within the range which we are expecting. So that additional provision requirement is going to come down in the subsequent quarters, maybe a quarter later. So I believe that from next year, first quarter or second quarter, we may see that we reach across at least 1 ROA going to come. Because the way the portfolio is behaving, our SMA levels are there, SMA level, more than INR 1 crore we declare and more than INR 1 crore, the portfolio is around INR 1,550 crores only currently. And that includes SMA-0 also. As you know that includes SMA-1 and 2. So SMA-0, 1 and 2, all three put together is INR 1,550 crores against a book of INR 220,000 crores. So that is not even 0.7%. So I believe that maybe next year any time we will see that bank crosses 1% ROA.

Okay. My second question is any possibility -- see this amount is small in MTNL, but do you see any possibility of recovery in MTNL account, because when...

Yes. Discussions are going on, going on. Bankers are waiting for a favorable solution so that not only the employees of the stake, all stakeholders, our shareholders are also benefited out of the resolution plan. So discussions are already on. We expect something to come any time. It is again depending on the acceptability of the resolution, which is coming to us.

So will there be any haircut for the banks or it will be 100%...

As of now, there is no talk about that haircut as of now. That is not on the agenda.

Got it. And my last question is, sir, do you see any stress in any of the sectors where we are serving currently or any potential sectors where do you see the stress is building up in general in the industry -- across the industries?

See, if you -- I'll first talk about our bank's portfolio. If you look at our bank's portfolio, if I go back to around 2 years back, our slippages used to be in the range of 2% of our advances. And slowly and slowly, we have strengthened our credit monitoring system. We have strengthened our recovery collection system also. And as a result, last year, '23, '24, we improved in our slippages and upgradations, plus collections, '24, '25 we further improve. And this year also, we have kept a target of 1% to 1.25% only. So that is the last -- this is the continuous decline in our slippage ratio. This is the mechanism or the control mechanism or monitoring mechanism we have put in place. I'm confident that this will be achievable in this year. And if you ask me any particular segment where the stress is building up, I will say that as of now, we don't see any particular sector because if you look at my restructured book also, consistently, it is coming down. It is now around, I think, maybe INR 1,500-odd crores or INR 1,500 crores that now restructured. And that includes your normal restructuring plus COVID restructuring. So both. So that is very small amount where we could have thought of some -- and the slippages which we see and they are in the range bound. When we do business, certain slippages will continue to happen. But when we look at our segment-wise NPA also in various sectors like in retail, agri, MSME, so that segmental NPA percentage is also coming down on a quarter-on-quarter basis. Slippages are there, but they are not out of control. They are well within the knowledge also and manageable also.

We have the next question from the line of Amit Mishra.

Sir, my first question was on cost-to-income ratio. I think we are around 54% this quarter. I think it's lowest in 8 to 10 quarters. So what was the reason for this? And do we look similar range of cost to income in future or 56%, 57% as we have reported in the last 2 years?

See, Amit Ji, if you -- you're right that our cost-to-income ratio is lowest in the last 7, 8 quarters, we were at 61% also. Consistently, we have been coming down. There are many contributors to the cost-to-income ratio. If you look at our operational efficiency, our business per employee, business per branch is increasing. So additionally, that is helping the bank to improve on efficiency and cost efficiencies coming into the play. Then if you look at our cost, overall cost, that is also under control. And cost of deposit also is under -- we are managing well. We are -- with a 37% of CASA, we are able to manage our cost of deposits. And maybe if you can compare it with some other banks with a higher CASA ratio, their cost of deposit is still higher, but we are able to manage. We are using all available sources to raise resources, maybe through refinance or overseas deposit at overseas or to raise -- we raise equity also. So that is one. Then on yield front also, we are very cautious in taking exposure. You can see that our main focus is on the RAM segment where yields are slightly better than the corporate segment and our focus is on that. We have already reached around 63% of our RAM segment. So all these factors are helping us to improve our cost-to-income ratio. I believe going forward, the way we are planning the things to control the cost, to improve our income, fee-based income also you see that we are increasing. I believe that it should be in this range only. I believe it should not go up again. Our conscious effort is to reduce it further.

Sir, my next question is on retail mix. In your retail mix, there is line item pool. What kind of -- types of loans are in there covered in pool?

See, in pool, majority of the pool is home loan pool. And their CIBIL is more than 725. That is our cutoff. 725 is our cutoff for the pool. Majority of the pool is home loan.

90-plus percent, I can assume.

Yes, it should be. Just give me a second. Yes, 90% should be in the housing loan segment.

Okay. And sir, my last question is on current account. So we have seen a decline of 8%. And across other banks also, we have observed that there is a decline in current account. So any particular reason for sector or our bank, any trend you can point it out?

See, there is no particular reason for any decline in current account. Current account maybe in March in order to strengthen balance sheet, corporates may be keeping certain amount of liquid in their books. So that may be the reason that in March, there was a slightly higher current account balances. And in June, there is a slightly lower current account balances. I don't think any other reason it will be there. This may be the reason.

Okay. And sir, my last question on the same topic. Do you have average CASA number with you, average clients are during the quarter?

Average, I can give you separately. Right now, I'm not having but it will be around, I think, 90% to 95%. [Foreign Language]. Maybe 90%, Amit ji, 90% I can say roughly now. 90%.

[Operator Instructions] Then we have few questions from the chat window. The first question is, can you specify the total exposure for MTNL?

Total exposure for MTNL is INR 245 crores.

Okay. The second question is, is there any challenge in your SME book because your slippages have increased from INR 198 crores to INR 368 crores. So can you give some color there?

See, SME book, I already informed that only because -- slightly elevated because of one account only. Otherwise, the slippages are in the normal range only. That is one account which was already SMA-2 and that was under the watch list we have already declared and because of that only. Otherwise, slippages in SME book are in the normal course of business and normal slippages are there.

We have the next question from the line of Mr. Sushil Choksey.

My first question is, in your slide, you've shown vehicle loan at INR 50 crores to INR 82 crores. I know that UCO does second-hand car finance, which yields much better than any of your retail loans. What would be that portfolio out of vehicle loans?

Sir, that exact number -- that number I'm not having. But majority is firsthand, second-hand will not be so huge. Second-hand will be a very small number. It may not be very huge. We have just started, but we are not -- have such a huge portfolio to look into.

Sir, in my view, you are one of the few banks which has started this product and the market condition for second-hand car is very good, whether it's an imported second-hand or domestic. And the yield can be almost nearing double digit or at least 100 bps higher than the car loan, which you are doing today. In view of that, how are we going to capitalize on the market through bank's branch strategy, publicity or what that yields your benefit because looking at your guidance, we need support from some of these products to match all your aspirations.

See, Sushil ji, in this segment, we are looking for DSA tie-up because these segments generally come through DSAs only because like there are corporate agencies also like Maruti, they have their own. Mahindra, they have own, Toyota, they have own. So we are planning to have some tie-up with these corporate agencies itself so that the leads flow to us. So that is one segment. There are certain imported car dealers also, second-hand car dealers, we are talking to them also. And we got some leads also, maybe slightly high ticket leads we got also and we sanctioned also. That is also there. So apart from branch, the DSA network will be the most helpful. Online DSA network is there. Company's DSA network is there. So that which we are exploring.

Sir, my next question is our RAM and corporate book, 62-37 or 63-37 is stable where we are concerned. How are you seeing other than car loans, which is growing well, home loans are growing in reasonably double digit, you may do 18%, 20%. How are you seeing the advances on agriculture, MSME, retail, if you're looking from a yield perspective where the bank's balance sheet is concerned?

See, our home loan around 18% will continue to grow in this range of 18% to 20% home loan segment for last -- if you look at last around 6, 7 quarters or 8 quarters, our home loan growth continues to be in this range. And vehicle loan growth is also in the range of more than 30% for last 5, 6 quarters. And MSME particularly we have started focusing for last 2, 3 quarters where yields are slightly better than the retail loans. And MSME, our target is slightly mid-corporate segment than the small micro segment. So that is -- mid-corporate is the segment which we are now focusing in the MSME segment, where yields are slightly better than the corporate also and then the retail segment also. In personal loan, the growth is there. Personal loan, we are growing mostly in loans given to salaried employees of accounts, customers have been maintaining accounts with our bank and pensioners getting pension from our bank. Now we are coming out with a new product that loan -- personal loan to salaried customers, maintaining account with other banks also through NACH mandate and all this. That product is also in the offering. So we will try to grow -- to focus on those areas also where yields are slightly better than the corporate or the home loan segment.

Sir, most of your offering would be there in the marketplace from private or public, small finance bank also. Now to beat the banks who are in competition, either it has to be TAT, which is a better way to manage this or it is a rate which is lower than the market. What strategy we are adopting where MSME is concerned, specifically retail, I understand it's a rat race, so nobody can compete with a 10, 20 bps difference unless you sacrifice on quality.

See, MSME, we have only one USP, I will say, there is a TAT where we are focusing very closely, which is being monitored from head office level. Daily, our MSME team monitors these sanctions and their pendency at the hub level. Just to give you some idea about the -- I think we have already talked about that we -- last year, we created specialized hub for MSME segment. And last year, because of the creation of the hub first time in the history of the bank, total MSME sanctions crossed INR 12,000 crores, which was earlier INR 7,000 crores to INR 8,000 crores. So last year, INR 12,000 crores. This quarter in the first quarter itself, it is more than around INR 3,000 crores MSME segment -- sanctions. So it will continue to grow in next quarter and next quarter. So this MSME focused hub along with the tight monitoring because MSME journeys are all digitized. That is in the loan processing system. As and when anybody enters their proposal in the loan processing system, it is being monitored and the pendency is being watched at head office level. Wherever the proposal goes beyond TAT, our team from MSME team immediately gets into action to ask question why it is getting delayed. So that is the only mantra. If you see our MSME growth for the last 4, 5 quarters or 8 quarters. Only for last 2, 3 quarters, our growth has picked up. Earlier, our growth used to be 5%, 8%, 7%. Now it is 20% this quarter. Previous quarter, 18%. Prior to that 13%. And otherwise, it was not -- it was around 7%, 8% overall growth. So focus is purely on the MSME core business growth.

Sir, this business of MSME, average ticket would be INR 10 crores, INR 20 crores or lower?

It is lower also. It is lower also. It is not that we are getting every proposal INR 10 crores, INR 20 crores. It is INR 5 crores also, INR 4 crores also, INR 2 crores also, INR 1 crores also. So every type of proposal is coming.

And these are all regional sanction or zonal managers power or it will come to HO?

These are the -- see, up to INR 2 crores or INR 3 crores depending upon the delegated powers of the hub, they are getting sanctioned there only. And the zones are mostly added by DGMs now. There they get around INR 20 crores. And above INR 20 crores that comes to head office. So we have only three, one at hub, second is at zone and third is at head office. So head office gets into action only above INR 20 crores, zone up to INR 3 crores to INR 20 crores and INR 3 crores is sanctioned at the hub level.

So what would be the TAT on this product?

See, TAT if you ask me at head office -- our head office TAT, we try to see that 15 to 21 days is a maximum TAT...

As a bank average, you may say it because I don't want to dis-merit the retail or a regional level. On average, can I consider 3 weeks or 2 weeks as a good TAT?

2 to 3 weeks will be reasonable for all levels, 2 to 3 weeks.

Sir, my next question to Mr. Kamble, what is the unavailed credit today where corporate sector is concerned, which you have sanctioned or what is visible in pipeline?

It should be around INR 6,000 crores to INR 7,000 crores, which is -- which was availed earlier and because of the rate sensitivity, the amount we got back, and another INR 5,000 crores to INR 6,000 crores is sanctioned, which are yet to be disbursed. So overall, if you ask me, INR 10,000 crores to INR 12,000 crores is the unavailed limit for limits which were already availed paid back and limits which are yet to be availed.

And what is the sanction pipeline looking like?

Sanctioned pipeline will be again INR 5,000 crores to INR 7,000 crores currently.

Sir, most of the large PSU banks or peer banks have -- I'm not mincing words, but have shredded assets when NABARD, SIDBI, NAFED or equivalent agency with the PFCIC where the yield is below 6.5, 6.2, 5.8, 6.3. What is the strategy at UCO? Are we still having advances with the few selected PSUs and locking in or we have given it up?

See, you talked about 2, 3 names, we don't have exposure currently. We have taken that long back. So we are not there, I think for last 3, 4 quarters in this. Maybe in 1 or 2 NBFCs, we are still there, but our rates are slightly better than the rate which you told. So it's not that -- it is still there for NBFC. But other than NBFC, it is already back on. So that is already -- I'll say that unavailed.

Sir, I understood you are not willing to lend to them, good for us. Third is Saboo Ji, what is your outlook on treasury? Will you have a bumper profit in coming quarters? Or it's just a sustainable trajectory as RBI has already done all the predictions, maybe one more repo cut may come in 1 quarter or 2 quarters later, one doesn't know. [Foreign Language].

So Sushil Ji, we all know that RBI cut repo rate in the last quarter, it was 0.75 basis points, 25 in April and 50 in June again. So the June quarter has seen a bumper profit from treasury, you can see from the numbers also. We have around 4x more profit from treasury in the June quarter. So we have taken the opportunity. And now going forward, I think in the current quarter, so far, the yields are stable. And we don't think that any cut would be there in the current quarter. If at all, it will be maybe in the next quarter. So the current quarter will be stable quarter. Maybe still we have some opportunities of trading and booking some profits from the treasury also that will continue as and when we see the opportunity. So the reasonable number of profitability might be there.

Sir, how open are we to buy corporate bonds, which are yielding better than government bonds?

That also, we are continuously seeking the opportunity in the market. In the last quarter also, we can see that we have increased our non-SLR portfolio, particularly in the corporate bonds. So that we are continuously seeking for the opportunity in the market. Wherever the yield is okay and it meets our requirement, we are going into that also. So we will continue to invest into the corporate bond.

Are we investing in REIT and InvITs also?

No, not yet. We have not yet invested in any REIT or InvITs like thing, particularly in the corporate bond. So we are seeking other opportunities also, we are exploring that also. We'll take a call -- reasonable call as and when it comes to us.

Sir, good luck to the bank, and you may have the best year in coming time. Sir, last question, I forgot. There is chatter from the ministry that you may have to do a QIP again. Is it soon or it is in the year?

See, we have already taken the approval of the shareholders after the Board recommendation, shareholders have already given approval. And bank is having it in a government holding of 90%. So we will be reaching out to the government also for giving their approval. And once approval is received, we will seize the opportune time. If required, we may go for the best way to raise capital. So whatever is the mode available, maybe OFS or QIP or whatever. So we don't know. But let us see and wait.

We have two more questions from the line -- from the chat box. The first one is for FY '25 and 1Q FY '26, in terms of retail disbursements, especially in housing, what is the contribution of origination from DSA, branches, co-lending, assignment or others?

See, if you ask me in the housing loan, in the pool segment, there is a contribution of -- I will say that is -- I will not say co-lending out of our origination, but in the pool, the growth is in home loan. If you look at our home loan portfolio, particularly, there is no co-origination, nothing, that is purely branch initiated housing loan. Yes, there will be a contribution of DSAs in that housing loan segment. But exact number that how much origination was done by DSA that I'm not having but that number is clearly branch and originated of DSA initiated housing loan. Co-lending and pool, we have a separate number. That is already there, around I think -- around maybe INR 5,600 crores or INR 5,700 crores is from pool -- housing loan pool out of INR 6,500 crores.

Okay. The next question is, how can NIM decline by 4 basis points when yield declined by 30 bps Q-o-Q, while cost of funds declined by 5 bps Q-o-Q?

See, if you look at our income, income total -- income, I explained that last quarter, we had INR 283 crores of additional income in one of the accounts and which was a TWO account which was booked. So yield was slightly higher during that quarter. Now with this rate cut, I think the yield was expected around 22 bps with this rate cut. So yield -- the expected yield was 22 bps, but actual yield is around 30 bps.

Weighted average yield declined due to the repo cut was around 22 bps.

22 bps weighted average. So that is basically because of some additional recovery, one time -- one-off interest income in March '25.

So one more thing is there that this yield is only on the advances. But if you see the investment yield, that has declined only marginally. So we have around 25% -- 23% portfolio in investment also. So the overall NIM is protected through that also.

We take that as the last question. I request MD, sir, for any closing remarks.

Thank you. I thank you all, our analysts and -- for taking out time and attending our call and supporting the bank, I will say, and we'll continue to strive for the better performance in quarter after quarter as we have been doing for the last 2 years. So wishing all you also and to the bank also very best and look forward for your continued support in the times to come. Thank you very much.

Thank you very much from our side, sir. We generally don't get the opportunity, but in your case, I got it. So thank you for sparing your time for the analyst community. Thank you very much, sir, and all the best.

Thank you.

Thank you.

Thank you, everyone, for joining the UCO Bank earnings conference call. You may disconnect the lines now.