UCO Bank has reported a decline in its fourth quarter net profit. The reason for this are mainly the slippages and the non-performing loans (NPL), said Arun Kaul, CMD of UCO Bank in an interview with CNBC-TV18.
“Total addition of the slippages and NPLs is Rs 2,074 crore and total reduction is Rs 1,340 crore,” said Kaul.
The company does not see any restructuring in the next quarter.
Below is the edited transcript of Arun Kaul’s interview with Latha Venkatesh and Ekta Batra on CNBC-TV18.
Latha: There is a steep decline in the net interest income, so instead of starting with the non-performing loans (NPL), let me start with that. What accounted for the fall in net interest incomes (NII)?
A: Essentially, if you look at, during the year the credit growth has been muted; hardly any credit growth. Overall credit outstanding on March 31 is the same as 2014. Within this our retail growth has taken place, so corporate rate is continuously coming down. That is the one reason. Secondly, our slippages are very large and NPLs have gone up on which derecognised interest has taken place. As a result, NII growth is slightly on the negative side.
Latha: Can you take us through the slippages and the restructured for the quarter?
A: During the quarter our slippages were Rs 2,074 crore and the production non-performing asset (NPA) is Rs 1,340 crore. The net addition into gross NPAs and the reissue has moved up from 6,150 to 6,176. So, the restructured are concerned, we have seen a lot of restructuring in the last quarter in the steel sector. Although our restructured on March 31, 2015 are slightly lower than restructured as on April 1, 2014, March 31, 2014. But during the quarter we have seen a fairly large slippage and fairly large restructuring.
Latha: What was the amount?
A: It was Rs 2,333 crore primarily from the steel sectors.
Latha: What is the sense you are getting about the current quarter? Do you think the worst is out of the system or you may have to linger at?
A: No, there are two things. Where restructuring is concerned, probably the worst is behind us because we do not see many restructuring now coming up. As far as UCO Bank is concerned, we had in the past followed a strategy of growth through corporate and physical credit which stopped almost four, five years back and percentage of large corporate credit to the total credit substantially came down. It has come down from almost 70 percent five years back to right about 35 percent. In that also the major slippages which were to take place have already taken place.
Ekta: I heard your gross slippages were at Rs 2,074 crore for the quarter. So, did you see higher recoveries and upgrades and write-offs? What were they for the quarter?
A: Total addition of the total slippages and NPLs is Rs 2,074 crore and total reduction is Rs 1,340 crore.
Latha: So that much was recovered or upgraded?
A: It is upgraded; recovery, write-offs, all the three put together.
Latha: What kind of credit growth and margins are you seeing for the current quarter and indeed for the current year?
A: For the year end, March 31, 2015 our net interest margin (NIM) has gone down. Domestic NIM has slipped down to 2.52 percent from almost about three percent last year. Primarily because of large slippages which have taken place and the increased NPAs.
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