UCO Bank gets AA-/Positive Rating
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Infomerics Ratings has reaffirmed its ratings assigned to the additional tier I bonds / issuer ratings of UCO Bank (UCO) as it continues to derive strength from sovereign ownership with continued support, robust earnings profile, comfortable capitalization, growth in advances with diversified portfolio and consistent improvement in asset quality over the years.
However, the ratings are partially constrained by moderate resource profile and relatively moderate size of operations given the geographical concentration. The Positive Outlook reflects Infomerics Ratings expectations of continued growth in advances/deposits with geographical expansion in terms of new branches and expectations of maintenance of healthy asset quality and comfortable capitalisation levels.
Details of BASEL III AT I Bonds rating:
| Particulars | Details |
|---|---|
| ISIN | INE691A08096 |
| Credit Rating Agency (CRA) | Infomerics Valuations & Research Ltd. |
| Credit Rating | AA- |
| Amount Rated | ₹1,000 crore* |
| Outlook | Positive |
| Rating Action | Reaffirmed |
| Other Rating Action | Not Applicable |
| Date of Credit Rating | 05.08.2025 |
| Verification Status of CRA | Verified |
| Date of Verification | 05.08.2025 |
| Amount Utilized | ₹500 crore |
Click here to download Ratings PDF
Click here to download Financial Results of UCO Bank and all Banks for June 2025 Quarter
The distinguishing features of the Additional Tier I (AT-I) capital instruments (under Basel III) are the discretionary payment of coupons by the bank and principal write-down upon the breach of point of non-viability (PONV).
The Bank has a total CRAR of 18.39 % and Tier I ratio / CET-1 ratio of 16.36% / 16.05% as of 30th June 2025, with a substantial cushion above the regulatory requirement. The Bank is having a sizeable retail deposit base that forms a significant part of the total deposits. Its liquidity coverage ratio stood at 122.41% for the quarter ending March 31, 2025, as against minimum regulatory requirement of 100%.
The Bank had cash and balances with RBI amounting to Rs. 10,272 crore and net investments of Rs. 94,150 crores as on June 30, 2025 and maintaining adequate eligible reserves for the timely servicing of the coupon payment shall be monitorable.
Factors that could trigger a default event for non-equity Tier-I capital instruments (under Basel III) 2 resulting in the non-payment of the coupon are as follows: i) the bank exercising coupon discretion, ii) the inadequacy of eligible reserves to honour the coupon payment if the bank reports losses or low profits, or iii) the bank breaching the minimum regulatory CET-1 ratio.
Click here to download Financial Results of UCO Bank and all Banks for June 2025 Quarter
Capitalisation of the UCO is comfortable, with reported Common Equity Tier-1 (CET 1) ratio, Tier-I capital adequacy ratio (CRAR) and overall, CRAR at 16.05%, 16.36% & 18.39% respectively, as on June 30, 2025 (16.03%, 16.37% & 18.49% respectively, as on March 31,2025). UCO had raised equity capital worth Rs. 2000 crore through QIP in March 2025 and has also obtained board & shareholder approval for raising equity share capital up to Rs. 2700 crore (face value) in FY26.
The capital level is also supported by regular infusion from GoI. Infomerics Ratings expects that the bank will maintain a sufficient buffer above the minimum regulatory capital requirement to meet credit growth supported by the improvement in internal accruals.
Click here to download Ratings PDF
