The bank reports loss of Rs 440 crore in the June quarter as bad loans rise threefold; GVK Power, Bhushan Energy also turn NPAs
The overseas oil exploration business along with a domestic special economic zone of Sandesara Group of Gujarat have both turned non-performing assets (NPAs) in the just concluded quarter.
Some years back, Nitin Sandesara-promoted Sterling Biotech had turned into a high profile NPA account for the banking system, featuring among the top ten defaulters with combined dues of Rs 1,732 crore to banks like State Bank of India, Punjab National Bank, Bank of Baroda, Union Bank of India, Andhra Bank and UCO Bank.
UCO Bank has recognised Sterling SEZ and Infrastructure Ltd, which is spread over 3,120 acres in Bharuch, and Sterling Global Oil Resources Ltd that has more than 2000 square miles of oil acreage in Niger Delta as NPAs in the first quarter of FY17 along with major corporates like Essar Steel, GVK Power and Bhushan Energy, resulting in threefold rise in dud assets.
UCO's exposure to the Sterling duo was Rs 300 crore while it had extended Rs 546 crore to Essar Steel and Rs 222 crore to GVK Power.
The bank's managing director and chief executive R K Takkar, however, expects Essar Steel account to turn good next quarter.
"We are hopeful of upgradation of Essar steel account this quarter," UCO head said during an earnings press conference.
Essar Steel was at one point reportedly carrying debt burden of close to Rs 30,000 crore.
UCO Bank has suffered fresh slippages of Rs 3,116 crore during the first quarter, a significant jump over previous year's level of Rs 1,252 crore.
In the current quarter, UCO sees fresh slippages coming down between a level of Rs 1,500 crore and Rs 1,600 crore.
The public sector lender on Tuesday reported a negative bottomline of Rs 440 crore in the June quarter, thereby suffering losses for the third successive quarter, compared to Rs 257 crore profit in the year-ago period.
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