UCO Bank sees no MSME stress from US tariffs, Iran war

New Delhi: Kolkata-based UCO Bank said its micro, small and medium enterprises (MSME) portfolio is not facing any stress on account of the US tariffs impact and West Asia crisis.

The public sector bank's chief executive, Ashwani Kumar, told ET that its loan portfolio performance behaviour is healthy on a year-on-year basis. The bank's special mention accounts in the MSME portfolio having exposure of ₹1 crore and above reduced to 1.05% of the MSME loan book in March, at ₹487 crore, as against ₹582 crore in December 2025, he said.

Also Read: FinMin asks banks to take measures for welfare of persons with disabilities


"The non-performing assets in the MSME portfolio also reduced to 3.42% in March 2026, as against 5.52% in March 2025," he added.

The bank posted a 23% increase in fourth-quarter net profit to ₹801 crore, compared with ₹653 crore in the year-ago period.

Kumar said that the lender has allocated ₹1,200 crore this fiscal towards strengthening its cybersecurity operations and has initiated the development of artificial intelligence (AI)-based modules to enhance capabilities in areas such as risk management, fraud detection and operational efficiency.

"Our immediate focus is on reinforcing and securing our existing IT infrastructure to effectively respond to evolving risks," Kumar said, adding that the lender is adopting a phased and continuous approach to IT infrastructure hardening, embedding advanced security controls and aligning with future-ready technologies "We have already set up a 24x7 state-of-the-art cybersecurity operation centre," he said.

Also Read: RBI clears Subrat Mohanty’s reappointment as Axis Bank Executive Director for three years

Finance minister Nirmala Sitharaman last Thursday chaired a meeting, along with Union minister for electronics and information technology Ashwini Vaishnaw, scheduled commercial banks and key stakeholders, to assess the potential impact of emerging threats linked to recent developments in AI models, particularly the possibility of such technologies being misused to weaponise software vulnerabilities. Kumar said UCO Bank will actively pursue its plans to raise up to ₹5,000 crore through tier II, AT1 or infrastructure bonds during this financial year, in one or more tranches, depending on market conditions. "Additionally, we will look to raise equity capital of up to ₹2,700 crore (face value) through permissible modes such as a follow-on public offering or qualified institutional placement," he said.

On the issue of credit growth, Kumar said that the lender has given conservative guidance of 12-14% and is hopeful of surpassing it, given credit growth for the bank stood at 15.62% in 2023-24, 17.72% in 2024-25 and 19.44% in 2025-26. "We have been able to maintain the net interest margin (NIM) ratio between 37% and 38% for the last three years and are confident to maintain NIM above 3%," he added.