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Union Bank of India sees credit pick up in H2, pares credit growth target to 7-9%

The bank may look at raising up to Rs 4,000 crore via Additional Tier-1 bonds in the fourth quarter if required.

November 14, 2019 / 07:55 PM IST
 
 
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Union Bank of India on November 14 said that loan growth is likely to pick up in the second half though it has pared its year-end target to 7-9 percent from 9-11 percent as set earlier.

The bank reported 1.7 percent growth in total advances in the second quarter this financial year. Union Bank of India MD and CEO Rajkiran Rai G said that there is some uptick in the third quarter and credit growth may increase to 5 percent by December-end.

In the July-September quarter, the bank posted growth of 2.5 percent in domestic advances, driven by 15.7 percent growth in retail loans.

Rai said that the bank disbursed Rs 12,000 crore of fresh loans under the government's credit outreach programme held in October. These include loans given to retail, MSME, agriculture and under the Mudra scheme.

He said that the bank is open to lending to non-banking finance companies (NBFCs), even as its exposure to the sector was at 14 percent of the loan book.

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Rai said the bank was comfortable as far as capital adequacy was concerned but may look at raising up to Rs 4,000 crore via Additional Tier-1 bonds in the fourth quarter if required.

The bank has set a target of 2.25 percent for Net Interest Margins (NIMs) for the current financial year. In the second quarter, its domestic NIMs were at 2.44 percent, up from 2.17 percent in the previous quarter and 2.18 percent in the same period last year.

Union Bank of India posted net loss stood of Rs 1,194 in the second quarter, against a profit of Rs 139 crore a year ago.

Its NPA ratio and net NPA ratio stood at 15.24 percent and 6.98 percent at the end of September 2019, lower as compared to 15.74 percent and 8.42 percent respectively, a year ago.

The bank reported slippages of Rs 4219 crore in the second quarter, as compared to Rs 2667 crore in the same period last year.

Rai said that the bank expects bad loan recoveries of Rs 9000 crore this financial year, which includes Rs 2500-3000 crore from cases being dealt under National Company Law Tribunal (NCLT) currently.
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