Q2 Lending Surges
UCO Bank Reports Strong Q2 Lending Growth That Outpaces Deposit Increases
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Key Points
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UCO Bank’s domestic advances rose 25.98% year over year to ₹2.57 lakh crore, faster than the 24.68% growth in total advances.
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Domestic deposits reached ₹3.32 lakh crore, up 14.48% year over year, compared with total deposit growth of 14.05%.
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The 24.68% year-over-year advance growth exceeded UCO Bank’s stated FY27 credit-growth guidance of 12%–14%; advances grew about 5.49% sequentially from ₹2.73 lakh crore in June.
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The Sahi report also cited UCO Bank’s Q1 FY27 operating profit growth of 79.84% year over year to ₹2,810 crore and a gross NPA ratio of 2.08%, providing recent operating and asset-quality context.
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UCO Bank had recently received approval for foreign-currency borrowing of up to US$1 billion, which the report described as a way to diversify funding and help ease liquidity pressure.
UCO Bank's lending engine is running faster than expected. For the quarter ended September 30, 2026, the bank reported provisional business figures showing advances surged 24.68% year over year to ₹2.88 lakh crore, well above its stated guidance of 12%–14% growth Sahi Report. Total business jumped 18.84% to ₹6.37 lakh crore, though deposit growth lagged at 14.05%, creating a widening gap between new loans and available funds.
The rapid advance growth is outpacing deposit mobilization, raising questions about the bank's credit-to-deposit ratio. Domestic advances climbed even faster at 25.98% year over year to ₹2.57 lakh crore, while domestic deposits grew just 14.48% to ₹3.32 lakh crore Sahi Report. These figures remain provisional and subject to change before the bank's formal quarterly results.
Lending Growth Nearly Doubles Bank's Official Target
UCO Bank's 24.68% year-over-year advance growth roughly doubles the bank's own FY27 credit-growth guidance of 12%–14% Sahi Report. Sequentially, advances grew 5.49% from ₹2.73 lakh crore in June, showing consistent quarter-over-quarter momentum. Domestic advances performed even stronger, rising 25.98% annually—indicating strength in the bank's core lending business.
Deposit Growth Falls Behind Lending Expansion
While advances surged, deposits grew at half that pace. Total deposits reached ₹3.49 lakh crore, up 14.05% year over year Sahi Report. Domestic deposits climbed 14.48% to ₹3.32 lakh crore. This 10-percentage-point gap between advance growth and deposit growth suggests the bank may face liquidity pressure, forcing it to rely more on wholesale funding or borrowed capital.
Foreign Borrowing Approval Signals Funding Push
To ease funding constraints, UCO Bank recently won approval for foreign-currency borrowing of up to US$1 billion Sahi Report. The move diversifies the bank's funding sources and helps reduce reliance on domestic deposits. This step suggests management views the deposit-growth slowdown as a near-term challenge that requires tapping overseas capital markets.
Operating Profit and Asset Quality Show Resilience
Beyond lending metrics, UCO Bank's Q1 FY27 results showed operational strength. Operating profit jumped 79.84% year over year to ₹2,810 crore Sahi Report. The bank's gross non-performing asset ratio stood at 2.08%, indicating solid asset quality. These figures suggest the rapid lending push has not yet pressured loan quality, though investors should monitor whether the fast growth sustains this balance.
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