UCO Bank gets S&P 'BBB' long-term rating, outlook stable

UCO Bank (NSE: UCOBANK) said in a filing on 04 Nov 2026 that S&P Global Ratings has assigned it a long-term issuer credit rating of 'BBB' and a short-term rating of 'A-2'. The outlook on the long-term rating is stable. The rating rationale is dated 04 Nov 2026 and is enclosed with the filing.

Key highlights

• Long-term issuer credit rating: BBB, outlook stable
• Short-term issuer credit rating: A-2
• Rating assigned: 04 Nov 2026
• Core equity capital to be raised: ₹2,700 crore, as approved by the board
• Risk-adjusted capital ratio: 9.5% as of 31 Mar 2026; S&P expects above 10%

The rating action in numbers

Rating moves depend on capital and India's sovereign rating

The starting point for the rating is 'bbb-', the same as for any bank operating predominantly in India. S&P could downgrade UCO Bank if it lowers its sovereign ratings on India or revises down its assessment of the bank's stand-alone credit profile (SACP). It could also downgrade if the RAC ratio declines below 9.5% on a sustained basis.

S&P could upgrade the rating if it raises the sovereign ratings on India and revises the bank's SACP upward. S&P expects the RAC ratio to climb above 10% as the bank raises ₹2,700 crore of core equity capital, and says it could raise this capital by fiscal 2028. The bank's CET1 ratio was 16.4% as of end-March 2026, and it intends to keep the ratio above 15%.

Profitability and credit costs trail domestic peers

UCO Bank's return on assets was 0.79% as of end-March 2026, below the system average of about 1.3%. S&P expects profitability to reach about 1.2% by end-fiscal 2029, narrowing the gap with domestic peers.

S&P expects credit costs of 0.4%-0.5% of customer loans in fiscal 2028-2029, up from 0.3% in fiscal 2026. S&P says the uptick "reflects an increase in steady-state credit costs under the Reserve Bank of India's expected credit loss framework and tapering recoveries from the bank's written-off accounts."

Asset quality and funding are the other points S&P tracks

S&P expects the nonperforming assets ratio to hover at 2.5%-3.0% over the next two years, compared with 2.4% as of end-September 2026. Agriculture is 14% of total advances, and financial collateral covers about 40% of agriculture loans.

Deposits were 92%-93% of total funding over the past five years, and the loan-to-deposit ratio was about 80.2% as of end-March 2026. S&P puts the bank's stable funding ratio at an average of 127% over the past five years.

What the rating means for UCO Bank's shareholders

The filing does not say what the rating means for the bank's borrowing costs or share price, or what rating the bank held before.

The next dated items are the rating rationale enclosed with the filing and S&P's expectation that the capital raise could be completed by fiscal 2028.