Shares of UCO Bank extended their gains on Tuesday after rallying 19 percent in the previous trading session. The stock made a strong start to the trade at ₹19.30, compared to the previous closing price of ₹18.65, and continued to rise to hit an intraday high of ₹21.35 before closing the day higher at ₹20.95, up 12.33 percent.
During Tuesday's trade, the stock recorded a volume of 151.4 million shares, both on the NSE and BSE, a 3.38 times surge over its average weekly volume of 44.8 million.
UCO Bank shares have surged 44 percent in the last five sessions. Over the last three months, the stock delivered a staggering return of 82 percent and it is currently trading at a three-year high.
The shares started moving higher after the Reserve Bank of India (RBI) gave approval to nine Russian banks to open special Vostro accounts with UCO Bank and IndusInd Bank to facilitate overseas trade in rupees.
Sberbank and VTB Bank are the largest and second-largest banks in Russia, respectively, and are the first foreign lenders to receive approval after the RBI announced the guidelines on overseas trade in Indian rupees for international trade settlements, aiming to promote exports and facilitate imports.
Commerce Secretary Sunil Barthwal said that Russia's Gazprom had opened an account with UCO Bank, and VTB Bank and SberBank have opened accounts with their own India-based branch offices. UCO Bank already has a Vostro account-based facility in Iran.
Last month, the RBI and finance ministry asked the top management of banks and representatives of trade bodies to push export and import transactions in the rupee. They want banks in India to connect with their foreign counterparts for the opening of special rupee Vostro accounts to facilitate cross-border trade in the Indian currency rather than the popular mode of the US dollar.
For the September quarter, UCO Bank reported a more than two-fold jump in its standalone net profit to ₹504.52 crore, compared to a net profit of ₹205.39 crore in the corresponding quarter a year ago.
Domestic revenues of the bank during the second quarter stood at ₹4,794.76 crore, while international revenues stood at ₹170.08 crore.
The bank's interest income during Q2 FY23 rose to ₹4,184.89 crore from ₹3,719.79 crore. The net interest margin (NIM) of the bank during the quarter stood at 2.84 percent.
On the asset quality side, the gross NPAs of the bank dipped to 6.58 percent of the gross advances in Q2 FY23 from 8.98 percent a year ago. while the net NPA stood at 1.99 percent from 3.37 percent in the previous similar period. The bank's total provisioning for the quarter came in at ₹405.76 crore, down from ₹1,018.62 crore earlier.
In September 2021, the RBI removed UCO Bank from the prompt corrective action framework. The bank came out of PCA restrictions after more than four years. The RBI initiated prompt corrective action in May 2017 in view of high non-performing assets and a negative return on assets.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
