UCO Bank has secured $730 million in foreign currency deposits, exceeding its $500 million target. This funding helps the lender support its rapid credit growth of 24.7% while reducing reliance on higher-cost domestic bulk deposits.
UCO Bank has secured $730 million through foreign currency deposits, successfully surpassing its initial target of $500 million. This capital mobilization provides a critical liquidity buffer for the Kolkata-based lender, which is currently experiencing a period of fast-paced lending activity. The bank reported credit growth of 24.7% in the September quarter, a figure that significantly exceeds its original annual guidance of 12-14%.
For investors, this funding strategy is a way to manage costs effectively. By accessing foreign currency deposits, the bank can reduce its need to rely on domestic bulk funding, which is typically more expensive and can compress profit margins. Management, led by MD and CEO in-charge Rajendra Kumar Saboo, is focused on maintaining the bank's net interest margin—the difference between the interest earned on loans and the interest paid on deposits—within a target range of 2.8-2.9%. To achieve this, the bank is also prioritizing digital services and corporate cash management to attract more stable, lower-cost institutional deposits.
The bank has also shown measurable improvement in its asset quality. Its gross non-performing assets, or bad loans, dropped to 1.96% as of September, putting it on schedule to meet its targets for the 2027 fiscal year. Furthermore, the lender recovered ₹1,910 crore in the first half of the year, keeping it on track to reach its annual recovery goal of ₹2,000-2,500 crore.
In terms of business expansion, UCO Bank is continuing to grow its physical network. After opening 18 new branches in the first half of the year, the lender has announced plans to add another 100-110 outlets by the end of March 2027. Its recent expansion into GIFT City has already begun to yield results, with that branch alone facilitating $350 million in lending activities.
Moving forward, the primary factor for shareholders to monitor is the bank's ability to maintain a balance between its rapid credit expansion and its deposit base. While strong loan growth drives income, it puts pressure on liquidity if not matched by a steady inflow of deposits. Investors may watch the bank's credit-to-deposit ratio and quarterly margin performance to see if it can sustain this growth without facing increased borrowing costs or liquidity constraints in the coming months.