Kolkata, Jan 17 (PTI) State-owned UCO Bank, which is awaiting the right market conditions to tap capital-raising options, will seek an extension from market regulator SEBI to meet the minimum public shareholding requirement, as the government is unlikely to dilute its stake to 25 per cent by the stipulated August 1, 2026 deadline, the bank's top management said on Friday.

Addressing a virtual press conference, UCO Bank Managing Director and Chief Executive Officer Ashwani Kumar said the government currently holds 90.95 per cent stake in the lender, and the bank does not expect to meet the dilution requirement within the existing timeline. "We will seek an extension," he said.

Kumar said the bank is evaluating fund-raising options, including a qualified institutional placement (QIP) and an offer for sale (OFS), depending on market conditions. While the size of any OFS would be decided by the government, the bank's board has already approved a QIP of up to Rs 2,700 crore. In the last quarter of the previous financial year, UCO Bank had raised Rs 2,000 crore through a QIP.

The comments came as the state-owned lender reported a 15.65 per cent year-on-year rise in net profit to Rs 739 crore for the third quarter ended December 2025, aided by steady core operational growth, improved margins and better asset quality.

The bank's total business grew 13.25 per cent year-on-year, led by a 16.74 per cent increase in gross advances, while deposits rose 10.64 per cent, Kumar said.

The lender's net interest margin (NIM) improved to 3.08 per cent, with domestic NIM at 3.27 per cent, reflecting better yield management. Kumar said margins are expected to remain healthy in the coming quarters.

Asset quality continued to strengthen, with gross non-performing assets declining to 2.41 per cent as of December 31, 2025, from 2.97 per cent a year ago, while net NPAs fell to 0.36 per cent from 0.63 per cent.

Kumar said the bank does not see any major sectoral stress, adding that the Special Mention Account (SMA) book has reduced to about Rs 1,600 crore from Rs 2,500 crore over recent quarters.

On earnings quality, Kumar said profitability is being driven by core operations rather than technical recoveries, with net interest income growing over 10 per cent and fee-based income rising more than 20 per cent year-on-year.

Commenting on the corporate loan book, Kumar said growth in the segment remained subdued during the quarter due to pricing considerations, despite a healthy pipeline. He said the bank currently has corporate loan proposals worth around Rs 10,000 crore that have been sanctioned but are yet to be disbursed, due to pricing. In addition, proposals worth Rs 4,000-Rs 5,000 crore are at various stages of sanction, he said.

Kumar added that with improving pricing conditions, the bank expects better growth in the corporate loan book going forward.

Commenting on the loan mix, he said retail lending remains strong, particularly in housing, vehicle and gold loans, which continue to report low delinquency levels. Growth in the corporate loan book, he added, is being pursued selectively with a focus on better pricing and risk-adjusted returns.

On overseas exposure, Kumar clarified that UCO Bank operates only a representative office in Iran and does not foresee any impact from current global developments.

The bank has maintained its credit growth guidance of 12-14 per cent for the year, Kumar said, adding that UCO Bank has consistently outperformed this range in recent periods. He also highlighted the lender's continued focus on digitisation, technology upgrades and customer service improvements to sustain profitability and competitiveness. PTI BSM NN