Public sector lender UCO Bank said on Tuesday that it would raise Rs825 crore from the market to fund its business growth and aims for a 82 per cent increase in net profit this year.

"We are looking to raise Rs325 crore through perpetual non-convertible preference shares during the second quarter and about Rs500 crore from follow-on public offer in the third quarter of this fiscal," UCO Bank Chairman and Managing Director S K Goel told a news agency.

The capital raised will help the bank to record 25 per cent loan growth for the next two year, he said.

"Hopefully, by the third quarter market should stabilise and that would provide us opportunity to raise capital from the primary market," he said.

Asked about bottomline target for the current fiscal, Goel said, the bank expects to earn a profit of Rs 750 crore this fiscal against Rs412 crore in the previous year.

 The profit would increase by 82 per cent over the last fiscal.

"Despite uncertainties and high interest rate we expect to achieve profit target as things are expected to look up after the end of the second quarter," he said.

To achieve the profit target, he said the bank plans to increase its CASA (Current Account and Savings account) ratio to 35 per cent as against 27 percent at the end of March 2008.

This will bring down the cost of deposits by one per cent.

Besides, the bank plans to recover about Rs1,050 crore from the bad accounts, he said, adding, of this Rs150 crore would directly add to the profit. Speaking about treasury loss due to uncertain market conditions, Goel said, the bank would have to make provisioning of about Rs130 crore.

Treasury income has come under pressure because of uncertain market conditions, depreciation in equity and government bonds, he said.

Goel said as per the capital restructuring plan, share capital of the bank would come down to Rs500 crore from the existing Rs800 crore.

Government equity worth Rs300 crore would be converted into preference shares which would help in increasing the earning per share.

However, cabinet approval is still awaited in this regard, he said.

Post issue of preference shares and follow-on-offer, government holding in the bank would go down to 54 percent from present 75 per cent, 

Capital adequacy ratio of the bank stood at 10.09 per cent for the year ended March 2008.