01 — At a Glance
The Government Bank That’s Finally Getting Interesting
- 52-Week High / Low₹38.8 / ₹24.7
- Q3 FY26 Revenue₹6,652 Cr
- Q3 FY26 PAT₹740 Cr
- Q3 EPS₹0.59
- Annualised EPS (Q3×4)₹2.36
- Book Value₹26.5
- Price to Book1.00x
- Dividend Yield1.47%
- GNPA Ratio2.41%
- ROCE5.76%
The Setup: UCO Bank—Kolkata’s government-owned lender from 1943—is doing something unexpected. Credit growth of 16.74% YoY driven by retail (+28.18%), agriculture (+24.69%), and MSME (+23.56%) lending. Deposit growth of 10.64% YoY, maintained CASA ratio at 38.41%, and asset quality improving (GNPA fell 50 bps YoY to 2.41%). PAT up 15.65% YoY to ₹740 crore in Q3. And the stock trades at 1.00x book value (₹26.5) when it was ₹38.8 just 12 months ago. Narrative: “PSU bank stuck in a turnaround.” Reality: turnaround is working.
02 — Introduction
Welcome to the Slowest Government Transformation Story Ever
Let’s establish something: UCO Bank is government-owned. The Government of India holds 90.95% as of December 2025. That means your tax rupees, your grandmother’s pension, and LIC’s corpus are all sitting inside this one Kolkata bank. For decades, this sounded like a punchline. A bloated, slow, politically-managed deposit machine that would never compete with modern fintech banks.
Except the narrative is breaking. The bank has grown credit at 16.74% YoY. Retail lending is up 28.18%. MSME is up 23.56%. Deposits are up 10.64%. Asset quality is improving. Cost of funds is down to 4.48% from 4.79% in Q1 FY25. Net interest margin is expanding. Fee income is up 30% YoY. And PAT is up 15.65% from ₹639 crore (Q3 FY25) to ₹740 crore (Q3 FY26).
The capital adequacy ratio stands at 17.43%. The bank is sitting on ₹1,252 crore in forward-looking ECL buffers (way ahead of June 2027 ECL implementation). There are 3,327 branches across 30% in the eastern region, 61% in rural and semi-urban areas. Business per employee: ₹26.12 crore. Per branch: ₹166.32 crore.
And yet—and this is the curious part—the stock fell 27.3% in the last year. Down 6.53% in three months. Traded at ₹38.8 twelve months ago. Now at ₹26.1. The narrative is not matching the numbers. Let’s figure out why.
Concall Reality Check (Jan 2026): Management stated that deposit repricing is “75% complete” and “by first quarter entire book will be repriced.” CASA maintained at 37–38% for “last 7, 8 quarters.” CD ratio improving structurally every quarter. Credit guidance: 12–14% despite reported 16.74% growth — conservative anchoring.
03 — Business Model: PSU Banking, But With Ambition
They Lend Money. Deposit Network Is Stupid Strong. Now They’re Actually Trying.
UCO Bank’s business is straightforward: take deposits, lend money, make fees, manage treasury. Revenue mix from Q1 FY25 was Corporate 35%, Treasury 35%, Retail 29%, Others 1%. That’s a fairly balanced book — not hyper-concentrated in one segment like some peers.
But here’s the pivot: the bank is intentionally rebalancing toward RAM (Retail, Agriculture, MSME). Q3 data shows RAM makes up ~66% of the credit mix. Retail advances are up 28.18% YoY. Agri is up 24.69% YoY. MSME is up 23.56% YoY. These are granular, lower-ticket, but high-growth segments.
The deposit franchise is their superpower. CASA ratio at 38.41%—better than most mid-sized PSU peers. Domestic deposits: ₹2,93,542 crore. That’s real fortress. Rural and semi-urban branches: 61% of network. When 61% of your branches are in small towns and villages, you’re forced to be good at low-cost, sticky deposits. The bank’s not choosing granular lending because it’s trendy. It’s choosing it because that’s where its deposit base naturally sits.
Credit rating agencies have rated ~74% of the loan book A or above. 18.5% remains unrated. The gross NPA ratio improved to 2.41% (from 2.69% in FY25, 2.91% in Q3 FY25). PCR (Provision Coverage Ratio) stands at 97.32%. They’re literally pre-provisioning for losses before ECL rules even kick in.
RAM Share66%Credit Mix
CASA Ratio38.41%Domestic
GNPA Ratio2.41%Improving
Branches3,327Pan-India
Digital Wing: Project Parivartan (digital transformation) now has >30 journeys live across Retail/Agri/MSME. ₹15,900 crore digital business book built. >2 lakh customers originated via straight-through-processing (STP). Mobile banking users grew 4x in 2 years to 64 lakh. WhatsApp banking: 47 services, 17 lakh users in <1 year. Most banks issue press releases about these numbers. UCO is actually executing them.
💬 For a PSU bank, digital adoption of this scale is honestly unusual. Does this make you more or less bullish on the turnaround story?
04 — Financials Overview
Q3 FY26: The Numbers That Don’t Match The Stock Price
Result type: Quarterly Results | Q3 FY26 EPS: ₹0.59 | Annualised EPS (Q3×4): ₹2.36 | FY25 EPS: ₹1.95
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue (Interest+Other) | 6,652 | 6,220 | 6,537 | +6.94% | +1.76% |
| Operating Profit | 1,155 | 996 | 1,025 | +15.96% | +12.68% |
| Operating Margin % | 17.36% | 16.01% | 15.68% | +135 bps | +168 bps |
| PAT | 740 | 639 | 620 | +15.65% | +19.35% |
| EPS (₹) | 0.59 | 0.53 | 0.49 | +11.32% | +20.41% |
Hang On: Q3 FY26 P/E = CMP ₹26.1 ÷ Annualised EPS ₹2.36 = P/E 11.06x. But screener shows 12.5x P/E using FY25 annualised EPS of ₹2.09. Why the gap? Because FY26 earnings are accelerating. Operating profit up 15.96% YoY. NIM expanding (3.08% global, 3.27% domestic). Fee income up 30% YoY. Cost-to-income ratio improved 330 bps YoY to 52.20%. This is a bank with positive operational momentum, not a stagnant one. The market hasn’t repriced for it yet.
05 — Valuation: Fair Value Range
What’s UCO Bank Actually Worth?
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