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UBI on growth path, focussing on bad loans recovery: Ashok Kumar Pradhan

UBI’s net interest income for the quarter under review grew 75% at Rs 773 crore as against Rs 443 crore in the corresponding period last year.

, ET Bureau|
Updated: Oct 30, 2019, 08.04 PM IST
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Kolkata: State-run United Bank of India said it is on a growth path with three time higher operating profit and focus on recovery of bad loans while it has announced Rs 124 crore net profit for the second quarter to September, making it third quarterly net profit in a row amid a challenging business environment.

The bank’s operating profit for September quarter was Rs 599 crore compared with Rs 206 crore in the year ago period. Net profit was Rs 124 crore compared with Rs 883 crore loss for the same period.

“We had made a commitment to our stakeholders to bring back the bank on a growth path. The bank has done significantly well. We are on a growth path now,” managing director Ashok Kumar Pradhan said.

He said that the rise in profits was primarily on account of higher interest income and improved bad loan recovery. A valuation gain of Rs 87 crore from treasury operation has also contributed to the profit.

“We aim to grow net interest margin to 3% next quarter,” Pradhan said. NIM, a key profitability ratio, improved to 2.91% in the quarter under review compared with 2.16% a year back.

UBI’s net interest income for the quarter under review grew 75% at Rs 773 crore as against Rs 443 crore in the corresponding period last year.

Its gross non-performing assets ratio improved to 15.51% at the end of September from 22.69% a year back. The ratio was at 15.89% at the end of June. Net NPA ratio improved to 7.88% from 14.36% in the same period while it was 8.19% three months back.

Pradhan said NPA number would have been better had the resolution of large companies such as Bhushan Power & Steel and Alok Industries happened under the bankruptcy law as per expectations. UBI has Rs 1600 crore exposure to these firms.

During the quarter, it saw fresh slippages of Rs 1040 crore, mostly due to defaults by a few large companies including Reliance Commercial Financial, Reliance Home Finance and IL&FS Securities.

The bank has managed to growth loan books 11.4% to Rs 74421 crore despite the restrictions on lending to lower rated firms under Reserve Bank of India’s prompt corrective action framework. The management said it is focusing on retail, agriculture and MSME as well as mid corporates to grow lending.

It has joined hands with Srei Equipment Finance to jointly offer loans to MSME units and retail customers under a co-lending arrangement.

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