United Bank of India put up a poor show in its Q4 earnings. Thanks to the rise in bad loans. However, the bank CMD Archana Bhargava is confident of bringing stress assets down in the coming quarters.
United Bank of India's ( UBI ) net profit tanked 79 percent year-on-year to Rs 31 crore. However, the bank is unlikely to see any big loan account slipping into bad loan category in the coming quarters.
"Some slippages do happen even after restructuring because of various reasons, but I do not expect it to be more than 30 percent of what we did in the last quarter," Archana Bhargava - chairman and managing director of the bank told CNBC-TV18 in an interview.
Bhargava is hopeful that the slippages in the April - June quarter will be lesser than Rs 1057 crore, recorded in January - March quarter.
During the fourth quarter, the bank has restructured loans in the agriculture and micro, small and medium enterprise (MSME) sectors and in some select large accounts.
Below is the verbatim transcript of Archana Bhargava’s interview on CNBC-TV18
Q: What are your profits as well as your net interest income (NII)?
A: Our total business has grown to Rs 1,70,359 crore registering a year on year (YoY) growth of 11.35 percent. The total deposits have increased to Rs 1,00,651 crore reflecting a growth of 12.94 percent. The total advances have risen to Rs 69,708 crore, again a YoY growth of 9.14 percent.
The current account savings account (CASA) ratio has been maintained at 40 percent of our total deposits. The core retail deposits as a percentage of our total deposits has increased to 85 percent which is up from 81 percent. Resultantly, our bulk deposits at preferential rates including certificate of deposits (CDs) have come down substantially to 11.91 percent from last year’s 18.32 percent level.
Our priority sector advances continue to be 40 percent of our total advances with an increase of 15 percent YoY to reach Rs 25,604 crore.
Our CD ratio is healthy. Net income increased to Rs 9251 crore with a YoY growth of 16.21 percent. Our non-interest income has risen to Rs 1067 crore which reflects a YoY growth of 45 percent. Yield on investments has improved to 7.91 percent. Yield on advances has increased to 11.31 percent. Interest expenditure has increased to 23.39 percent to reach Rs 6764 crore.
Our operating expenditure increased to Rs 1504 crore with a YoY growth of 8.72 percent and operating profit has recorded a YoY growth of 12 percent to reach Rs 2050 crore.
Our net profit is down. It is Rs 392 crore and has come down from Rs 632 crore last year. It translates to a 38 percent reduction due to higher provisioning for the year which stands at Rs 1658 crore.
The non-performing assets (NPA) provisions are Rs 1010 crore. The provisions for restructured accounts stand at Rs 180 crore and there is a provision for Rs 490 crore that has been made for pension, gratuity and wages.
Net interest margin (NIM) still stands at 2.67 percent for the full year.
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