Rajkiran Rai G, Managing Director & CEO, Union Bank of India, speaks about the third-quarter results, segments of growth, slippages and overseas business among others during an interview with Mansee Dave, Zee Business. Edited Excerpts: 

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Q: How was the third quarter for your bank and name the segment where growth was seen in the retail portfolio?

A: Retail Growth stood at 10% on Year-on-Year (YoY) basis in the last quarter. Union Bank's performance has been steady and is improving and it has posted a profit of Rs575 crore in the quarter. Similarly, there is an improvement in net interest margins and cost to income has gone down. All operating efficiencies have also improved a lot and are reflecting in our numbers.

 

Q: Your provisions has increased from Rs1680 crore to Rs1820 crore. What led to this rise in provisions?

A: A large chunk of an HFC slipped into non-performing assets (NPA) in the third quarter and this slippage has increased the NPA numbers of the bank. Hedging also had an impact on the provisioning numbers, however, it will normalise in future. Operating profit is on a rise and there is a reduction in provisioning cost and this will help the bank in increasing the net profit.

 

Q: Your NII has seen a whopping jump of 25% on a YoY basis. How do you see this?

A: There is a substantial improvement in average advances. At the same time, there is an improvement in margin while deposit cost has gone down by 13 basis points and the yield on advances has improved by 12 basis points. These factors have had an impact on the net interest income, which is going to be steady and a substantial improvement will be seen in the net interest income in time to come.

 

Q: Name the segments that performed well for you?

A: Retail has grown by 10%, while MSME has grown by 5% and corporate credit growth has been a positive one. We have sanctions in the corporate segment, which will be disbursed in the fourth quarter. This is why our credit growth is likely to stand between 7% and 9% for the complete year. Besides, the global advances grew by 5.8% till the end of the third quarter and are likely to improve further in the fourth quarter.

 

Q: Tell us about the slippages in this quarter. Where are you seeing the stress currently?

A: The bank's slippages went up in the third quarter due to an HFC account of Rs2,260 crore, which slipped to become an NPA account. Going forward, no such big slippage is visible in corporate credit neither something seems to be under stress. Besides, our corporate loan book stands around Rs2,000 crore, which is a small amount when compared to our book. So, we are not seeing any big slippages. Rest of the slippages are coming from MSME and agriculture which will moderate gradually.

 

Q: We would like to know about your loan portfolio and what is your loan outlook?

A: Loan growth will remain positive and we in our projections have said that our credit growth will stand between 7-9% by the end of the fourth quarter. The kind of sanctions we have in our hand and the disbursement plans will help us in ending up with a growth of 9%.  

 

Q: We would like to know about your growth from Business in overseas operations. Do you see any growth opportunities there?

A: Overseas business had some negativities in the last two years and that's why the book has shrunk a lot. But good opportunities are available in the overseas market and it is also providing good margins this is a reason that a growth of over 30% is visible in the overseas book. Going forward, certain sanctions are lined up. This is why the steady growth will be available in the overseas book.

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 Q: There was not much from the government with regards to PSU Banks in the Budget. Will this affect you on the capital front or you find yourself sufficient enough to manage without government infusion?

A: Capital adequacy is very good. If you have a look at the Union Bank than the CRAR is above 14% and CET1 is at 11.65%. It is a very-very comfortable cushion and that's why it can sustain the credit growth of next year. Besides, the improvement in books and performance will enable us to raise further capital and we will think of raising some more capital in the third quarter of the next fiscal (FY21).