A year after it shot into limelight reporting a record Rs.1,238 crore loss, the city-based United Bank of India closed the third quarter of 2014-15 with a Rs. 41.8 crore net profit saying that consolidation of its bottom line hinged on the economy and the Budget.
P. Srinivas, UBI’s new Managing Director and CEO, admitted to fresh slippages saying “Lending and the economy.. both need to pick up”. The bank is petitioning the Reserve Bank of India to lift the curbs that it had clamped, after huge under-reporting of bad loans came to light following a forensic audit.
“The RBI has recently lifted the recruitment ban and we have begun the process of hiring 700 officers and 500 clerks.. but lending has to pick up” Mr. Srinivas said. The curbs bar UBI from lending to big corporates allowing it to lend only to small and medium sized companies with good credit ratings. Restrictions on credit deployment and with muted credit off take, UBI’s interest income moderated to Rs.2,509 crore in the third quarter against Rs.2,765 crore a year ago.
This, along with Rs.600 crore additional slippages, led to an increase in gross NPA and net NPA compared to the previous quarter.
“We want to reduce NPA but that becomes difficult when there is not much opportunity to increase credit”, he said adding that NPA depends on the economy as most corporates were in stress.
The bank was aiming to bring gross NPA ratio to less than 10 per cent by the June quarter of 2015-16 from above 12 per cent now.
The UBI Board during the day also cleared issuance of debts and preferential shares to the Government .
The RBI has recently lifted the recruitment ban and we have begun the process of hiring 700 officers and 500 clerks.. but lending has to pick up.
— P. Srinivas,
MD and CEO, United Bank