UCO Bank (UCOBANK) Q1 FY27 Earnings Call: Credit Growth Hits 21% vs 12-14% Guide, GNPA Falls to 2.08%

UCO Bank held its Q1 FY27 earnings call on July 22, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Headline Performance Beats Guidance on Most Fronts

• Total business of Rs.6,05,000 crore as of 30 June 2026 (Q1 FY 2026-2027), representing 15.53% YoY growth, with advances at Rs.2,72,768 crore (+21.18% YoY) and deposits at Rs.3,32,315 crore (+11.28% YoY).
• Operating profit jumped 79.8% to Rs.2,810 crore in Q1 FY 2026-2027, driven by NII growth of 16.85%, fee income growth of 35%, and recovery from technical write-off (TW) accounts of Rs.1,018 crore.
• Net profit rose 8% YoY to Rs.656 crore in Q1 FY 2026-2027, despite a one-time DTA charge of Rs.1,237 crore from the statutory shift from the old 35% tax regime to the new 25% regime; total tax provision stood at Rs.1,919 crore.
• Q1 FY 2026-2027 annualized ROA of 0.68% was impacted by the tax charge; management estimates ROA would have exceeded 1% without the one-time item, and expects ROA to approach ~1% by end of FY 2026-2027.
• All FY 2026-2027 guidance metrics were exceeded in Q1: deposit growth 11.28% (guided 10-12%), credit growth 21%+ (guided 12-14%), CASA ratio ~37% (within guidance), RAM advances 64.5% (guided 62-65%), annualized credit cost 0.39% (guided <0.75%), and annualized slippage ratio 0.63% (guided <1%).

Sharp Improvement in GNPA, NNPA, and Coverage Ratios

• GNPA improved to 2.08% as of 30 June 2026, down 55 bps YoY; NNPA at 0.25%, down 20 bps; provision coverage ratio (PCR) reached 97.85%.
• Annualized slippage ratio of 0.63% in Q1 FY 2026-2027 remained well below the FY 2026-2027 guidance of <1%; the SMA book (>Rs.1 crore) declined from Rs.1,125 crore (0.43% of advances) in March 2026 to Rs.1,009 crore (0.36%) in Q1 FY 2026-2027.
• Annualized credit cost of 0.39% in Q1 FY 2026-2027 was roughly half the FY 2026-2027 guidance of <0.75%; net NPA stood at 0.25% and provision coverage ratio (excluding technical write-offs) at 88% as of 30 June 2026.
• Management sees no stress in any specific sector and maintained credit growth guidance of 12-14% for FY 2026-2027, to be reviewed after Q2 FY 2026-2027 results despite Q1 annualised growth of 21%.
• ECL implementation on 1 April 2027 — the bank has already created a buffer covering 60% of the assessed requirement and plans to create the remaining 40% over the next four to five quarters (by around Q4 FY 2026-2027).

RAM Advances Drive 25%+ Growth; Corporate Book Also Strong

• Retail, Agri & MSME (RAM) advances grew 25.27% YoY in Q1 FY 2026-2027, with retail up 27.32%, agri up 30%, and MSME up 18.79%; RAM share of total advances stood at 64.52%, targeted to remain around 65% for FY 2026-2027.
• Home loans rose 20% YoY and vehicle loans surged 65% YoY in Q1 FY 2026-2027; management guided home loan growth of ~20-25% and vehicle loan growth of ~30% for full FY 2026-2027.
• Corporate advances grew 17% YoY in Q1 FY 2026-2027, driven by working capital availment and demand shift from the bond market; the bank has no IBPC exposure and is curtailing low-yield PSU/government advances.
• CD ratio at 82%; management is focused on increasing deposit growth, particularly CASA, which grew 12.34% YoY with a ratio of 36.94%.
• Post-West Bengal state election, management expects an improved investment climate and sees opportunity in infrastructure/industrial financing, leveraging its 400 branches in the state and pan-India network of 3,421 branches.
• Under ECLGS 5.0, the bank had sanctioned Rs.2,150 crore and disbursed Rs.1,700 crore as of Q1 FY 2026-2027, representing less than 50% of eligible customers.

NIM Above Guidance; Cost-to-Income Temporarily Boosted by Recoveries

• Q1 FY 2026-2027 NIM came in at 3.05%, above the official FY 2026-2027 guidance range of 2.8%-2.90%; management maintained NIM guidance at 2.8%-2.9% for FY 2026-2027, with potential to exceed 2.9%.
• Cost of funds moderated to 4.36% in Q1 FY 2026-2027; management expects cost of deposits to remain stable as repricing is complete, though cost of deposits increased QoQ due to reclassification of deposits/borrowings.
• Cost-to-income ratio improved to 37.49% in Q1 FY 2026-2027 versus 54.06% in FY 2025-2026, but the quarter included Rs.1,018 crore of TW recovery (including ~Rs.800 crore from non-recurring accounts); management guides normalized cost-to-income at ~50% for FY 2026-2027.
• Statutory shift to the new tax regime from FY 2026-2027 resulted in a one-time charge of Rs.1,237 crore in Q1 FY 2026-2027; the bank now operates under the 25% tax regime versus the old 35% regime.
• Fee income from loan processing declined in Q1 FY 2026-2027 due to a change to actual-basis charging, but is expected to normalize for full FY 2026-2027; other commission income grew Rs.55 crore from sale of Rs.2,000 crore PSLC in Q1 FY 2026-2027.
• MCLR increased by 0.05% to 8.80% in July 2026 (Q2 FY 2026-2027); retail loan pricing is stable and corporate lending rates remain moderate with no significant cuts.

Project Parivartan 2.0 Drives Digital Balance Sheet to Rs.35,000 Cr

• Digital balance sheet reached Rs.35,000 crore as of 30 June 2026, up from Rs.25,000 crore on 31 March 2026; 70% of fixed deposits are now originated digitally.
• Project Parivartan 2.0 encompasses STP home loan, digital marketing, ULIO integration with RBI, CBDC, CASA back office, and DMS solution; the bank also launched a CBDC enhancement initiative.
• New products launched in Q1 FY 2026-2027: UCO Rising Star (children), UCO Gig scheme (gig workers), UCO Business Arm (startups), and UCO 3-in-1 with Aditya Birla Money (savings + demat + trading).
• Planned initiatives include omni-channel launch, cash management service, STP digital for MSME (up to Rs.1 crore), personal loan through contact center, and a Gift City branch opening within the next month.
• Sanction pipeline of ~Rs.15,000 crore supports the FY 2026-2027 credit growth guidance of 12-14%; management assured "performance continuity" going forward.

Guidance Maintained; ECL Buffer Build and Tax Normalisation in Focus

• FY 2026-2027 credit growth guidance maintained at 12-14% (Q1 annualised 21% to be reviewed after Q2 results); deposit growth guidance of 10-12% and CASA ratio guidance of ~37% reiterated.
• NIM guidance for FY 2026-2027 held at 2.8%-2.9% with potential to exceed 2.9%; credit cost guided below 0.75% for FY 2026-2027.
• ROA expected to approach ~1% by end of FY 2026-2027 (Q1 annualised 0.68% impacted by one-time DTA charge); normalized cost-to-income guided at ~50% for FY 2026-2027.
• ECL implementation on 1 April 2027 — the bank has created a buffer covering 60% of the assessed requirement and plans to build the remaining 40% over the next four to five quarters (by around Q4 FY 2026-2027).
• Post-West Bengal election, management expects an improved investment climate and sees infrastructure/industrial financing opportunity; no interest recovery from JP Associates resolution was recorded in Q1 FY 2026-2027.