UTI Bank was among the top gainers in the banking sector, rising 7.71% to Rs 53.10 midway today.

By 12:55 IST, volumes reached the 1.5-lakh mark on the counter on BSE thus far. Till now the scrip of UTI Bank has risen 36% from Rs 39 on 31 March 2003.

As per market talk, Tata Sons has acquired a significant stake in UTI Bank. In fact, the corporate house has been believed to be accumulating shares of the private bank over the last couple of months.

Earlier, there were reports that Tata Sons was keen on acquiring 10% stake in the private sector bank. Tata Sons is believed to have acquired 10% stake in UTI Bank as per the Reserve Bank of India (RBI) stipulation that corporate houses have a 10% upper limit in banks.

However, in due course, if the apex bank relaxes norms, Tatas may emerge as a strategic investor in the bank.

Meanwhile, the stock of UTI Bank turned ex-dividend on Monday. The bank's board had recommended a dividend of 22% (Rs 2.2 per share) for FY 2002-03.

Earlier, the company unveiled its fourth quarter as well as full year results ended 31 March 2003. For Q4, it posted a net profit of Rs 60.53 crore (Rs 42.06 crore) on total income of Rs 516.20 crore (Rs 467.75 crore). For FY 2002-03, net profit stood at Rs 192.18 crore (Rs 134.14 crore) on total income of Rs 1,875.28 crore (Rs 1,594.40 crore).

The healthy bottom line growth of 43% to Rs 192.18 crore for the full year ended 31 March 2003 was mainly backed by a good spurt in net interest income on the back of healthy rise in advances.

The bank has grown rapidly in the last one year with the balance sheet size reaching Rs 19,613 crore as on 31 March 2003, a growth of 36%. Total deposits of the bank recorded a robust growth of 38% to Rs 16,965 crore. Of this, saving bank deposits rose 62% to Rs 1,423 crore, while current account deposits increased 116% to Rs 2,486 crore.

The growth in the saving bank deposits base will help reduce the cost of deposits for the bank on a sustainable basis. Net advances increased 34% to Rs 7,180 crore, while retail advance rose massive by 354% to 1,100 crore, constituted over 15% of the total advances. The total investments of the bank also witnessed a growth of 38% to Rs 7,841 crore.

The bank continued to grow the share of retail business in its portfolio. Savings deposits rose 62% to Rs 1,423 crore, while retail advances rose a massive by 354% to 1,100 crore, constituting over 15% of the total advances. The bank is targeting retail advances to constitute 25% of the total advances by March 2004.

Of the total retail advances, auto finance constitutes 57%, housing loans 13%, personal loans 12% and education loans 1%. In auto finance, the main financing activities was undertake for commercial vehicles and two wheelers and the average yield works to about 14%.

The number of savings bank accounts grew 79% to reach 9.4 lakh. The acquisition of salary accounts contributed strongly to this growth. The growth in retail business has been possible by increasing its reach to 80 cities and towns across the country through 192 branches and extension counters and 822 ATMs, as compared to 139 branches and extension counters and 491 ATMs across 63 cities and towns in the previous year.

Also the bank launched its International Debit Card during the year and has issued 6.79 lakh cards upto March 2003. The total cardbase, including ATM cards, of the bank stood at around 12 lakhs as on March 2003. It launched an at par cheque book facility for all its savings bank customers, thus becoming the first bank in the country to do so. Also the bank launched a Resident Foreign Currency Account and formally launched its Priority Banking services across the country.

Earlier, there were reports that foreign funds have started approaching Unit Trust of India in order to acquire the latter's 33.56% stake in UTI Bank. Any investor who takes this stake will have a majority control in the bank. Other investors in the bank could also tag along with UTI to sell their equity holding in the bank, the reports suggested.

Analysts said that if UTI's stake is offloaded to an investment banker, a change in management control may not take place. But, if it is sold to a foreign bank, a more professional management may take charge of UTI Bank. Also, with the stake changing hands, an open offer will be triggered, which will benefit UTI Bank's shareholders.

Another advantage from the probable sale of stake is that the low capital adequacy ratio (CAR) of UTI Bank will improve. It will help the bank to release more funds to retail customers. The bank's CAR stands at 10.9% as against the stipulated 9% by Reserve Bank of India (RBI).

As on 31 March 2003, promoters held 54.74% stake in the bank, while the public, institutions and foreign bodies held 11%, 5.01% and 28.13%, respectively.