UCB's financial and credit profiles improve in H2FY24, says report

The financial and asset quality of Urban Cooperative Banks (UCBs) improved, with gross NPAs dropping to 8.8% in March 2024 from 10.9% in September 2023, and net NPAs falling to 2.8%. According to the RBI's June 2024 Financial Stability Report, better asset quality management, credit growth, and margins have boosted provision coverage, which rose to 70.1%. Net interest margins increased to 3.7% due to policy rate transmission and higher loan pricing. Despite this, return on equity declined to 7.9%. UCBs’ capital position improved, with CRAR rising to 17.5% in March 2024 from 16.9% in September 2023.