United Bank of India has turned profitable during October-December quarter due to sharp slide in provisions and jump in other income. However, the net was impacted by lower net interest income.
Discussing the result, MD and CEO P Srinivas said the non-performing asset recovery is picking up. Most accounts are likely to be upgraded in Q4, he added.
The bank had slippages of around Rs 1,600 crore versus Rs 786 crore (QoQ) and the fresh restructuring was at Rs 650 crore in Q3. Around Rs 530 crore from restructured account slipped into NPA in Q3.
Below is verbatim transcript of the interview:
Q: In terms of your asset quality what is the kind of trend that you are seeing, this quarter it is pretty bad, 12 percent is to be some sort of a record but do you see it improving from hereon?
A: If you go by gross non-performing assets (GNPA) ratios - because there are restrictions from the Reserve Bank of India (RBI) credit towards negative growth was there. Credit which used to be around Rs 78,000 crore has come down to Rs 65,000 crore but NPA which used to be around Rs 8,500 crore have come down to Rs 7,700 crore. NPA has come down but your ratios will certainly disturb because the denominator is coming down.
In fact if you see year-on-year (Y-o-Y) the bank which made Rs 1,238 crore of loss - now it has come down to Rs 42 crore of profit in the current quarter and this is the fourth consecutive quarter profit continuously made.
In spite of bank implementing very strong NPA identification system, the NPA recovery is picking up. Quarter after quarter upgradation and NPA recovery are picking up.
For example in the current quarter if you see Rs 318 crore was upgraded. Rs 194 crore cash recovery happened but there is a slippage of Rs 1,600 crore but this Rs 1,600 crore if you see, there are only seven accounts which contributed around Rs 1,100 crore out of which are above Rs 50 crore.
Many of the accounts are expected to upgrade in the current quarter. So we are very confident that NPA position in the days to improve but the problem for us we have to increase our credit portion.
Credit has to grow up, we are requesting the RBI to remove the restrictions at the earliest and even otherwise also within the restrictions we propose to increase the credit so that we compensate the percentages.
Q: Wanted to clarify this figure, Rs 1,600 crore of slippages which compares to around Rs 800 crore that you did in Q2?
A: Compared to Rs 786 crore in Q2. This quarter there are some high value accounts, which were slipped but many of them are very sure of recovery.
Q: Was there any interest reversal that we saw this quarter specifically considering that your net interest income (NII) has dipped on a year-on-year basis?
A: NII on a year-on-year basis it will certainly dip because December I have interest income advances position was quite high about 73,000 crore, my advances have come down now.
So automatically when advances have come down, your NII will come down but if you see quarter after quarter, in the current quarter three quarters my operating profit is increasing. In Q1 we have Rs 574 crore, Q2 we have Rs 459 crore, Q3 we have Rs 602 crore operating profit increasing.
Q: What was your fresh restructuring in this quarter as compared to the previous quarter?
A: My fresh restructuring in the current quarter is around Rs 650 crore.
Q: How much slipped from your fresh restructured book into fresh slippages?
A: The total restructured NPA during the current quarter is Rs 530 crore. Also, we have upgraded 230 restructured accounts.
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