UCO Bank has a target to bring down its Net NPA below 3% by March 2021: Atul Kumar Goel, MD & CEO

Atul Kumar Goel, Managing Director & Chief Executive Officer, UCO Bank, talks about September quarter results, recovery, NPAs, lending and deposit trends, corporate and retail loan book size, moratorium situation, provisioning and liquidity position among others during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts: 

Q: The numbers of September quarter has been a good one on every parameter. Let’s talk first about the NPA level, which has declined, what led to this fall? Also, tell us about the kind of focus the bank will have on the asset quality?

A: As far as asset quality of our bank is concerned, if you will have a look on the asset quality of last six to seven quarters than you will find that in every quarter, quarter-on-quarter, better work has been done here. If you have a year ago, then our gross NPA stood at Rs 25,665 crore, which is about 21.87%, and today this figure has dropped to Rs 13,366 crore, which is 11.62%. Similarly, if you have a look on our net NPA then it stood at Rs 7,238 crore, which is 7.32% a year ago in September 2019 and today it has dropped to Rs 3,832 crore, which is 3.63%. Your question was what will happen in the future then as I have said that it is improving quarter-on-quarter and we have a target to bring down the gross NPA to single digit in March 2021 which stands at 11.62% at present and the net NPA figure below 3%, which is possible because we are doing a great job in terms of recovery. We also have few NCLT accounts, which has been approved by both CoC as well as NCLT. We have accounts of around 2,000 customers from which we will get around Rs 812 crore.

Watch Zee Business Tweet Video Below: 

Q: How was the recovery in this quarter, especially recovery from big accounts and defaults and what recovery is expected in the future?

A: Pandemic started since March and if you want to know about the recovery of this quarter than there has been a cash recovery of Rs 254-256 crore and upgradation of Rs 234 crore. Generally, our number remains between Rs 1,000 crore but due to the pandemic, it has remained just above Rs 500 crore. The impact of the pandemic has ended and there is economic growth and it seems that it has reached the same level of February 2020, which was just before the COVID. This is why we assume that our recovery will be of at least Rs 1,000 crore and I am not adding the NCLT recoveries in it. NCLT will be a bonus to it. And as far as the current fresh additions are concerned then we do not have any big account in our kitty that is likely to fall. So there are small accounts and this is why I don’t think that there will be a huge addition. So the amount of recovery that will happen will definitely reduce our gross NPA and net NPA. Slight addition can happen in MSME and agriculture otherwise no big account is not visible at present which can add to it. 

Q: Is there any big write-off that you did due to which we are seeing a decline in NPAs? Also, tell us about the write-offs that may happen in the recent future?

A: As far as write-off is concerned than where we make 100% provision, we have given them a potential write/off or technical write-off and it is not an actual write-off. So, we will have the same issue in the recovery, which was there without the write-off. So, we have written-off around Rs 3,000 crore in this quarter and in future also we will see that places where our provisions will cross the 100% mark, then we can assume that we can make potential write-off between Rs 2,500-3,000 per quarter. 

Q: Operationally overall, the quarter looks good. So going forward, what kind of lending and deposit trends are visible? Also, provide your outlook on lending and deposit?

A: As far as credit-growth is concerned then our bank has been positive in retail, MSME and agriculture, since March 2020. We are positive in every sector. In the government scheme GECL that had Rs 6 lakh crore package, we have sanctioned around Rs 1,200 crore and around Rs, 1,000 crore has been disbursed. So, I feel that the credit growth will lie somewhere between 5% and 10% and the festive season is going on and we have given a target of around Rs 3,000 crore to the field functionaries till November. So, it remains somewhere between Rs 50-60 crore daily, thus there will be a credit growth between Rs 5% and 10%. 

Q: Let us know about your corporate loan book size in the overall loan book and also tell about the portion of the retail loan and what is your outlook on the two?

A: Our corporate book is around 42% and the remaining 58% contribution comes from RAM (Retail, Agriculture and MSME) sectors. And, we want to bring it to a 60:40 ratio in which 60% contribution will come from RAM and the remaining 40% from the corporate side. I would like to add something to it and that is that we have reversed the trend in the last two years, i.e. 60% was a corporate loan, earlier while 40% was a retail loan. So, the bank has totally transformed in the last two year. I would also like to provide the operating profit figure, which stood at Rs 381 crore in December 2018 – our bank’s quarterly operating profit. If you have a look at it in 2019-20, then in every quarter it has been above Rs 1,200 crore and there was no such quarter in which the operating profit was below Rs 1,200 crore. It is not so that it was more in some quarter and low in another.

So, this is a sustainable operating profit of Rs 1,200 crore of 2019-20. It was at Rs 1,200 crore in June as well, which increased to Rs 1,330 crore in September. So, the operating profit has turned sustainable. We came to net profit since the last three quarters, i.e. we were in net profit of March, June and September. Today our PCR stands around 90% and our net NPA is Rs 3,832 crore and if we provide it in the next 2-3 years then our net NPA will turn zero, it depends on asset classification age, i.e. is it sub-standard, doubtful-I or doubtful-II or doubtful-III. The provision will be decided on the basis of the category to which it will slip. If you consider it even for two years that you have to make the provision in two years then the number stands below Rs 2,000 crore. Now, you can assume that we have an operating profit of Rs 5,000c crore per year and credit course of Rs 2,000 crore, this to on the higher side because it will stay below Rs 2,000 crore.

Thus, you can assume the way to which the bank is heading. It is a complete transformation in just two years and you can see that there is operating growth of 10%, NII has grown by 10%, saving – that reduces our cost of deposit – has grown by 11%, although growth in deposit stands at 4% there is a growth of 11% in savings. 

Q: Tell us the kind of provisioning you are expecting and what percentage of the loan book comes under moratorium?

A: As far as the moratorium is concerned then provisioning conditions were provided for moratorium under which the accounts which on February 28, 2020, were under IndAS and 0, 1 and 2 are not available under moratorium and slips then make provisions of 10% for them. And we had to make that 10% by June and it was done in June, itself. Now, it is about restructuring and a 10% additional provision will be done on the kind of restructuring that will happen. So, today the small accounts we have, like education loan, personal loan, MSME, stands around 1,70 lakh in number worth around Rs 17,000 crore. None of the big accounts has approached us and our asset quality is good and none of our accounts has been downgraded, yet, neither anyone has approached us for that. So, I don’t feel that restructuring of more than Rs 4,000-5,000 crore will be required. Aas those who have approached us till date have an outstanding of just up to Rs 20 crore although we have provided a list of 1.70 lakh numbers on our website and have asked each borrower that those who need the relief of rescheduling can approach us but a huge number of people have not approached yet.

This is why; I don’t think that this number will go beyond Rs 3,000-4,000 crore, whose provision will be around Rs 300-400 crore. 

See Zee Business Live TV Streaming Below:

Q: Update us about your current liquidity position and is there any fundraising plans, if yes, then what is your plan in that regard?

A: We are very comfortable in terms of liquidity, Our SLR is 4-5% up than the minimum SLR that should be maintained. So, we are sitting on the liquidity and do not have any liquidity issue, neither there is any need to raise liquidity. On the daily basis, we look at the kind of outflow that occurred and how much inflow has happened and then manage things on the daily basis and take similar deposits. If we have a look at the deposit rate then our deposit rate is less than the normal rate. Our deposit on the normal rate for the year stands at 4.90% while the bulk deposit is available around 3-3.50%.